Fortress Investment Group Merger

Founded in 1998 as a private investment firm, Fortress Investment Group LLC is a highly diversified global investment management firm that is based out of New York City. Their services include investing and managing private equity funds, hedge funds, real estate related investments, debt securities, and other publicly traded alternative investment vehicles.

Led by founders Wesley Edens, Rob Kauffman, and Randal Nardone, Fortress Investment Group launched prior to the financial crisis in February of 2007, as the first private equity firm in the United States to begin to trade publicly.

Shortly after its launch to trade publicly, Fortress rapidly expanded into hedge funds and real estate investments and securities, which were overseen by Michael Novogratz and Pete Briger. Between 1999 and 2006 Fortress’s private equity funds had netted 39.7%, though the public aspect of the company would not result in being so lucrative.

In 2015, after continuing to struggle with its hedge fund business, Fortress announced that it would be shutting down its macro fund after it had been continuing to struggle with its performance. They announced that all of the capital would be returned to investors by the end of the year, and that Michael Novogratz, who had been with Fortress since 2002, would be retiring as well, also at the end of 2015.

In February of 2017 Fortress hit major news headlines again when word of its acquisition was announced. SoftBank Group Corp., a Japanese telecommunications giant founded by Masayoshi Son, announced that it would be merging with Fortress Investment Group, under which SoftBank and its subsidiaries would acquire Fortress for $3.3 billion, paid in cash. The acquisition was finally completed on December 27th, 2017 with SoftBank under the advisory of JP Morgan, and Morgan Stanley advising Fortress.

As a result of Softbank acquiring Fortress, “…each outstanding Fortess Class A share was converted so that each shareholder would receive $8.08 per share in cash…” (SoftBank Group Corp), demonstrating the nearly 75% decline in stock since its debut on the New York Stock Exchange in February of 2007, where it was at $18.50 per share. The proceeds of the mergers were distributed ‘…in accordance to the procedures that were outlined in Fortress’s Definitive Proxy as of June 7th, 2017” (SoftBank Group Corp), and learn more about Fortress Investment Group.

Approval of the transaction by Fortress’s shareholders was recorded on July 12th, 2017 alongside the receipt of all necessary regulatory approvals, and the merger agreement was unanimously approved by a committee of Fortress’s board of directors.

Privy to the terms of the contract, Fortress agreed to become an independent subsidiary of SoftBank, continuing to be headquartered in New York. It will also carry on being led by the “Fortress Principals” Peter Briger, Wes Edens, and Randy Nardone. The restructuring of the company will return them back to the private sector of the industry, allowing Fortress’s leaders Peter Briger and Wes Edens to now focus on their strengths as private fund managers. They will be overseeing about $70.1 billion in assets as a subsidiary of SoftBank, allowing them the opportunity to leave behind the headache of running a publicly trading company. As leaders of a public company, it was critiqued that they had struggled to really strengthen their stock in comparison to their competitors within the public sector, but in contrast many of their private equity funds had produced substantial returns over the years, and read full article.

As we exit the first few months after the completion of the merger, with the pressure of public trading off of their shoulders, there are high hopes that the company can continue to succeed in the realm that they have been proven to thrive in.

“SoftBank Group Completes Acquisition of Fortress Investment Group | Press Release.”SoftBank Group Corp, News: Press Releases, 28 Dec. 2016, www.softbank.jp/en/corp/news/press/sb/2017/20171228_01/.

Leave a Reply

Your email address will not be published. Required fields are marked *