ARES
Ares Management CORP
NYSE
8-K: Ares Management to Acquire GCP International for $3.7 Billion, Expanding Global Real Estate Platform
Sentiment:
Merger Announcement
8 October 2024 6:03 AM
Ares Management Corporation has agreed to acquire GCP International for $3.7 billion, significantly expanding its real estate assets under management and global presence.
Capital raise
Ares has secured a $2.0 billion bridge loan facility to finance the cash portion of the acquisition.
The company expects to finance the cash portion of the acquisition with a combination of cash on hand and other equity or debt financing, which may include equity or debt securities issued in one or more capital markets transactions.
Summary
- Ares Management Corporation will acquire GCP International for a total consideration of $3.7 billion.
- The deal includes approximately $1.8 billion in cash and $1.9 billion in Ares Class A common stock.
- The acquisition also includes a potential earn-out of up to $1.5 billion, payable through the end of 2027, with up to 85% payable in Ares stock.
- The earn-out is contingent on achieving financial targets related to growth in Japan and data center businesses.
- The shares and RSUs issued at closing are expected to represent approximately 6% of Ares' outstanding Class A common stock as of September 30, 2024.
- Ares has secured a $2.0 billion bridge loan facility to help finance the cash portion of the acquisition.
- The transaction is expected to close in the first half of 2025, subject to regulatory approvals and other closing conditions.
- The acquisition will nearly double Ares' real estate assets under management to approximately $96 billion.
- GCP International has $44 billion of AUM as of June 30, 2024, and is focused on industrial, digital infrastructure, and self-storage sectors.
Sentiment
Score: 8
Explanation: The document conveys a positive outlook on the acquisition, highlighting strategic benefits, growth opportunities, and expected accretion. The management commentary is optimistic, and the transaction is presented as a significant step forward for Ares.
Positives
- The acquisition significantly expands Ares' real estate platform, nearly doubling its AUM to $96 billion.
- GCP International brings a strong presence in key growth sectors like industrial and digital infrastructure.
- The transaction is expected to be accretive to Ares' earnings per share.
- The deal includes long-term performance incentives to align GCP International leadership with Ares' interests.
- GCP International has a strong track record in emerging economies and data center development.
- The combined entity is expected to become a top three owner and operator of industrial assets globally.
Negatives
- The acquisition is subject to regulatory approvals and other closing conditions, which could delay or prevent the deal from closing.
- The earn-out is contingent on achieving specific financial targets, which may not be met.
- The integration of GCP International into Ares' operations could present challenges.
- Ares will need to finance a significant cash portion of the acquisition, potentially through debt or equity issuances.
Risks
- The ability to successfully integrate GCP International into Ares' operations is a key risk.
- There is a risk that the expected benefits of the acquisition may not be fully realized.
- The earn-out payments are dependent on the performance of GCP International's businesses, which may not meet targets.
- The financing of the cash portion of the acquisition could impact Ares' financial condition.
- The transaction is subject to regulatory approvals, which could delay or prevent the closing.
Future Outlook
The acquisition is expected to be modestly accretive to Ares' after-tax realized income per share in the first full calendar year following the acquisition, with meaningfully higher accretion expected in future years. The combined entity is expected to be a leader in global real assets investing.
Management Comments
- Michael Arougheti, CEO of Ares, stated that they have long admired GCP's global real estate experience and capabilities.
- Bill Benjamin and Julie Solomon, Co-Heads of Ares Real Estate, believe the combination will enhance their strong position in the industry.
- Ming Mei, Co-Founder and CEO of GCP and GLP, is excited about the new opportunities the transaction will create for their clients.
- Michael Steele, President of GCP International, stated that they have found a partner in Ares that shares their philosophy and entrepreneurial culture.
Industry Context
This acquisition reflects a trend of consolidation in the alternative asset management industry, particularly in real estate. Ares is expanding its global footprint and capabilities to compete with other large players in the sector. The focus on industrial and digital infrastructure aligns with current market trends and investor demand.
Comparison to Industry Standards
- The acquisition of GCP International will position Ares as a major player in the global real estate market, comparable to firms like Blackstone and Brookfield Asset Management.
- The combined real estate AUM of approximately $96 billion will place Ares among the largest vertically integrated real estate platforms globally.
- GCP International's focus on industrial and data center assets aligns with the growing demand for these sectors, similar to strategies employed by other leading real estate investors.
- The transaction's structure, including a mix of cash and stock consideration with a performance-based earn-out, is a common approach in large-scale acquisitions in the asset management industry.
Stakeholder Impact
- Shareholders are expected to benefit from the accretive nature of the acquisition and the increased scale of the real estate platform.
- Employees of both Ares and GCP International will be integrated into the combined entity.
- Fund clients of both firms will have access to a broader range of investment opportunities.
- The transaction is expected to create a stronger and more competitive player in the real estate market.
Next Steps
- The transaction is subject to customary regulatory approvals and other closing conditions.
- Ares will work to integrate GCP International into its operations.
- Ares will finance the cash portion of the acquisition through a combination of cash on hand and other equity or debt financing.
- The company will host a conference call to discuss the transaction.
Key Dates
- 2024-06-30: GCP International's AUM was $44 billion as of this date.
- 2024-08-07: Ares filed its Quarterly Report on Form 10-Q with the SEC.
- 2024-09-30: Reference date for the number of outstanding Class A common stock for the acquisition.
- 2024-10-04: Date of the agreement to acquire GCP International and the bridge facility commitment.
- 2024-10-08: Ares issued a press release and investor presentation announcing the GCP Acquisition.
- 2025-01-01: Start of the first full calendar year following the acquisition, when modest accretion is expected.
- 2025-06-30: Expected closing date of the acquisition in the first half of 2025.
- 2027-12-31: End date for the earn-out period, with a potential six-month extension.
- 2024-11-08: End date for the archived replay of the conference call.
Keywords
Ares Management, GCP International, Acquisition, Real Estate, Alternative Asset Management, Industrial Real Estate, Data Centers, Assets Under Management, Merger, GLP Capital Partners
ARES
Ares Management CORP
NYSE
Sector: Financial Services
Filings with Classifications
Worse than expected
13 June 2025 4:32 PM
Insider Transaction Report
- The sale of 2,250,000 shares by a significant insider (10% owner and director) like Ares Management LLC is generally perceived negatively by the market, as it can signal a lack of confidence or a strategic reduction in exposure to the company.
- Such a large divestment can put downward pressure on the stock price and may be interpreted as a bearish signal.
Worse than expected
10 May 2025 12:28 AM
Quarterly Report
- Net income attributable to Ares Management Corporation Class A and non-voting common stockholders decreased to $21.9 million from $73 million in the prior year period.
Better than expected
3 May 2025 12:51 AM
Quarterly Report
- Ares Management Corporation's AUM surpassed $545 billion in Q1 2025, exceeding expectations.
- After-tax realized income reached $381.4 million, translating to $1.09 per share, which is better than anticipated.
- Fee related earnings were $367.3 million for the quarter, surpassing previous forecasts.
Better than expected
5 February 2025 6:17 AM
Earnings Release
- Ares Management reported record fundraising and AUM, indicating strong investor confidence and growth potential.
- The company's key financial metrics, such as Fee Related Earnings and Realized Income, showed significant increases compared to the previous year.
Worse than expected
29 November 2024 4:50 PM
SEC Form 4 Filing
- Ares Management, a significant shareholder, selling shares is generally viewed negatively by the market as it can indicate a lack of confidence in the company's future prospects.
Worse than expected
26 November 2024 4:39 PM
SEC Form 4 Filing
- The document indicates a reduction in stake by a major shareholder, which is generally viewed negatively by the market.
Capital raise
8 November 2024 6:07 AM
Quarterly Report
- In October 2024, Ares issued 30,000,000 shares of its Series B mandatory convertible preferred stock for total proceeds of $1,462.5 million.
- In October 2024, Ares issued $750.0 million in aggregate principal amount of 5.60% senior notes with a maturity date of October 2054.
Better than expected
8 November 2024 6:07 AM
Quarterly Report
- The company's total revenues, management fees, carried interest allocation, and net income all increased significantly compared to the same period last year.
Capital raise
31 October 2024 7:19 PM
Quarterly Report
- In October 2024, Ares issued 30,000,000 shares of its Series B mandatory convertible preferred stock, for total proceeds of $1,462.5 million (after deducting underwriting discounts but before offering expenses).
Better than expected
31 October 2024 7:19 PM
Quarterly Report
- The company's financial results exceeded expectations with strong growth in key metrics, including AUM, fee-related earnings, and realized income.
- The company's fundraising momentum and capital deployment were better than anticipated, leading to an optimistic outlook for the remainder of the year.
Capital raise
11 October 2024 4:42 PM
Debt Issuance
- Ares Management Corporation issued $750 million in senior notes.
- The company also entered into an underwriting agreement to issue 27,000,000 shares of 6.75% Series B Mandatory Convertible Preferred Stock, with an option for an additional 3,000,000 shares to cover over-allotments.
Capital raise
10 October 2024 4:50 PM
Capital Raise Announcement
- Ares Management Corporation issued 30 million shares of 6.75% Series B Mandatory Convertible Preferred Stock, raising $1.5 billion.
- The offering included an underwriter option for an additional 3 million shares, which was fully exercised.
- The net proceeds from the offering will be used to fund a portion of the cash consideration for the acquisition of GLP Capital Partners' international business and for general corporate purposes.
Capital raise
8 October 2024 6:03 AM
Merger Announcement
- Ares has secured a $2.0 billion bridge loan facility to finance the cash portion of the acquisition.
- The company expects to finance the cash portion of the acquisition with a combination of cash on hand and other equity or debt financing, which may include equity or debt securities issued in one or more capital markets transactions.
Capital raise
6 August 2024 7:27 PM
Quarterly Report
- The company issued and sold 2,650,000 shares of Class A common stock in an offering that closed on June 14, 2024, resulting in net proceeds of approximately $354.4 million.
- Subsequent to June 30, 2024, the underwriters exercised the 30-day option to purchase additional shares of Class A common stock, resulting in additional proceeds of $52.9 million.
Worse than expected
6 August 2024 7:27 PM
Quarterly Report
- Net income attributable to common stockholders decreased compared to the same period last year.
- Carried interest allocation was negative for both the quarter and six months ended June 30, 2024, compared to positive figures in the same periods of 2023.
Better than expected
1 August 2024 9:13 PM
Quarterly Report
- The company achieved record gross fundraising and the second-highest level of capital deployment in its history, indicating better than expected operational performance.
Capital raise
11 July 2024 5:14 PM
Capital Raise Update
- Ares Management Corporation raised approximately $52.92 million through the sale of additional shares.
- The total net proceeds from the offering, including the initial sale, reached approximately $408.21 million.
Capital raise
14 June 2024 4:15 PM
Capital Raise Announcement
- Ares Management Corporation raised approximately $356 million through the sale of 2,650,000 shares of Class A common stock.
- The underwriters have an option to purchase an additional 397,500 shares within 30 days, which could result in further capital being raised.
Worse than expected
8 May 2024 8:28 PM
Quarterly Report
- Net income attributable to common stockholders decreased by 22% year-over-year, indicating worse than expected results.
- Carried interest allocation decreased significantly to a loss of $32.5 million, primarily due to reversals in private equity and real estate funds, indicating worse than expected results.
Better than expected
1 May 2024 9:54 PM
Quarterly Report
- The company's AUM grew by 19% year-over-year, exceeding expectations.
- The company raised $17.4 billion in gross new capital, indicating strong investor confidence.
- Available capital reached a record high of $114.6 billion, positioning the company for future growth.
Better than expected
7 February 2024 9:30 PM
Quarterly Report
- The company's AUM, FPAUM, and available capital all reached record levels, indicating strong growth and investor confidence.
- The company's fundraising efforts were highly successful, exceeding expectations and positioning them for future growth.
- The company's after-tax realized income per share increased year-over-year, demonstrating improved profitability.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.