Under the terms of the agreement, Ramius and an affiliate of a third party investor in Ramius will receive 37.54 million and 2.71 million shares, respectively, of Cowen common stock, representing 71.24% of the new company on a fully diluted basis and Cowen shareholders will own approximately 28.76% of the new company.
Ramius will continue as the investment advisory subsidiary. As part of the transaction, the new company will also purchase from the affiliate of the third party investor the fifty percent interest in Ramius Fund of Funds not currently owned by Ramius.
Credit Suisse Securities (USA) and Willkie Farr & Gallagher LLP are serving as financial advisor and legal counsel, respectively, to Ramius. Where as, Sandler O’Neill + Partners and Wachtell, Lipton, Rosen & Katz are serving as financial advisor and legal counsel respectively to Cowen.
Peter A. Cohen, currently Founder and Managing Member of Ramius, will serve as Chairman and Chief Executive Officer of the combined company and Greg Malcolm, currently CEO and President of Cowen, will continue to serve in those capacities for the broker-dealer subsidiary.
Mr. Cohen, said: “We both have experienced teams that we believe will be augmented by the opportunity to attract new talent in growth areas. In addition, neither firm is encumbered by excessive leverage common today within the financial services industry, and while some firms have downsized not only their balance sheets but also their future expectations and earnings power, we believe this transaction affords us an opportunity to do precisely the opposite.”
Mr. Malcolm, said: “Looking at today’s financial landscape, both Ramius and Cowen have taken the view that growth will resume in several identifiable areas of corporate finance and investment in which we have strong, established franchises. With core strengths in global alternative investing, strategic advisory services, research, brokerage, and capital markets activity, we believe this combination will provide significant cross-selling and integrated business opportunities by leveraging our relationship networks.”
The new company will retain the Cowen Group name and the combined company will have a 10-member Board of Directors. The company’s headquarters will remain in New York even after the close. The combined company will have approximately 578 employees.
The transaction is subject to Cowen stockholder approval, regulatory approval and other customary closing conditions. The transaction is expected to close in the fourth quarter of 2009.
Ramius is a privately-owned alternative investment firm with approximately $7.7 billion of assets under management invested across a range of alternative investment vehicles. It manages a variety of domestic and offshore funds.
