8-KSecurities & ListingRegulation FDOther Events+1

Ares Management Corp 8-K Report, Unregistered Securities Sale (May 20, 2021)

Filed May 20, 2021For Securities:ARESARES-PB

Summary

Ares Management Corporation (ARES) announced on May 20, 2021, its definitive agreement to acquire the U.S. real estate investment advisory and distribution business of Black Creek Group. This acquisition, expected to close in the third quarter of 2021, will be partly financed through the issuance of approximately 3,496,353 operating group units (OGUs) of Ares Holdings L.P. to the sellers at closing, representing about 1% of Ares' total equity as of May 19, 2021. Additionally, contingent upon achieving certain revenue milestones post-closing, Ares may issue up to $137.5 million in further OGUs or Class A common stock. This strategic move, alongside the previously announced Landmark Partners acquisition, positions Ares for significant growth. The company projects its fee-related earnings and dividends per share of Class A common stock to increase by 20% or more annually in the coming years. The issuance of OGUs is being conducted under Section 4(a)(2) of the Securities Act of 1933, exempting it from full registration requirements.

Key Highlights

  • 1Ares Management Corp. is acquiring Black Creek Group's U.S. real estate advisory and distribution business.
  • 2The acquisition is expected to close in the third quarter of 2021, subject to customary closing conditions.
  • 3A portion of the purchase price will be settled with approximately 3,496,353 operating group units (OGUs) of Ares Holdings L.P. at closing.
  • 4An additional earnout of up to $137.5 million in OGUs or Class A common stock is possible, contingent on future revenue milestones.
  • 5The OGUs issued at closing are expected to represent approximately 1% of Ares' total equity as of May 19, 2021.
  • 6Ares anticipates fee-related earnings and dividends per share to grow 20%+ annually following this and the Landmark Partners acquisition.
  • 7The OGU issuance is being made in reliance on Section 4(a)(2) of the Securities Act of 1933.

Frequently Asked Questions

This 8-K filing announces Ares Management Corporation's definitive agreement to acquire the U.S. real estate investment advisory and distribution business of Black Creek Group. It also details the equity structure of the transaction, including the issuance of operating group units (OGUs).

The acquisition is being financed through a combination of cash consideration and the issuance of approximately 3,496,353 OGUs of Ares Holdings L.P. at closing. There is also a potential earnout of up to $137.5 million in OGUs or Class A common stock tied to future performance milestones.

Ares expects that this acquisition, combined with the earlier acquisition of Landmark Partners, will lead to an increase of 20% or more per year in its fee-related earnings and dividends per share of Class A common stock in the coming years.

The operating group units (OGUs) are being issued in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended. This exemption allows for the sale of securities to a limited number of investors without the need for public registration, typically used in private placements or acquisitions.