SCHEDULE 13D/A: Bridge Investment Group to Merge with Apollo Global Management in Stock-for-Stock Deal

Bridge Investment Group Holdings Inc. has entered into a definitive merger agreement to be acquired by Apollo Global Management, Inc., with Bridge shareholders receiving Apollo common stock.

Summary

• Bridge Investment Group Holdings Inc. (the "Issuer") has signed an Agreement and Plan of Merger with Apollo Global Management, Inc. ("Parent") and its subsidiaries.
• Under the terms, Merger Sub Inc. will merge into the Issuer (Corporate Merger), and Merger Sub LLC will merge into Bridge Investment Group Holdings LLC (OpCo) (LLC Merger), resulting in both the Issuer and OpCo becoming wholly-owned subsidiaries of Parent.
• Each outstanding share of Class A Common Stock will be converted into 0.07081 shares of Parent common stock (Class A Exchange Ratio), plus cash for fractional shares.
• Each outstanding share of Class B Common Stock will be converted into 0.00006 shares of Parent common stock (Class B Exchange Ratio), with the value not exceeding $0.01, plus cash for fractional shares.
• Outstanding and unvested Issuer RSU Awards and Issuer Restricted Stock Awards will be converted into Parent RSU Awards and Parent Restricted Stock Awards, respectively, based on the Class A Exchange Ratio, retaining original terms.
• Unvested Issuer Restricted Stock Awards held by non-employee directors will fully vest immediately prior to the merger and convert into Corporate Merger Consideration.
• Outstanding and unvested OpCo Class A Awards will convert into Parent OpCo Stock Awards based on the Class A Exchange Ratio, retaining original terms.
• A Second Amended and Restated Tax Receivable Agreement (TRA) has been executed, modifying terms for TRA Members (including Reporting Persons) to forego acceleration of certain payments and link future payments to Parent's consolidated tax liability, with no accelerated payments for future Parent change of control.
• Key Reporting Persons (Robert Randolph Morse, Jonathan Slager, Adam O'Farrell, Dean Allara) and their affiliates, collectively controlling approximately 51.4% of the Common Stock's voting power, have entered into Voting Agreements.
• These Voting Agreements commit the Specified Stockholders to vote in favor of the merger and against any competing acquisition proposals, and include restrictions on transferring their securities.
• The merger is subject to customary conditions, including approval by a majority of the aggregate voting power of the outstanding Common Stock.
• The closing of the transactions is expected two business days after conditions are met or waived, but not before six months following the Merger Agreement date without Parent's consent.
• The Merger Agreement can be terminated under various circumstances, including mutual agreement, if closing does not occur by the 12-month anniversary, or if the Issuer pursues a Superior Proposal (subject to a termination fee) or the board makes an adverse recommendation change.
• As of February 21, 2025, there were 44,707,839 shares of Class A Common Stock outstanding.
• Reporting Persons engaged in 'sell-to-cover' transactions of Class A Common Stock in early January 2025 at weighted average prices ranging from $8.07 to $8.31 per share.

Sentiment

Score: 7

Explanation: The document announces a definitive merger agreement, indicating a clear path forward for the company. The terms are laid out, and significant shareholder support is secured, reducing uncertainty. While the stock-for-stock nature means future market risk, the transaction itself is a positive development for the company's strategic future.

Positives

• The definitive merger agreement provides a clear strategic direction and potential exit for shareholders of Bridge Investment Group.
• The transaction structure, involving an exchange into Apollo Global Management common stock, offers Bridge shareholders continued exposure to a larger, diversified asset management platform.
• The Voting Agreements, with key shareholders controlling 51.4% of voting power, significantly increase the likelihood of obtaining the required stockholder approval for the merger.
• The modification of the Tax Receivable Agreement ensures a structured approach to tax attribute utilization post-merger, avoiding immediate acceleration of payments for TRA Members.

Negatives

• The Class B Exchange Ratio is very low (0.00006 shares of Parent common stock), with a value cap of $0.01 per share, indicating minimal value for Class B shareholders in the merger.
• The merger consideration is entirely in stock, meaning Bridge shareholders will be subject to the future performance and volatility of Apollo Global Management's stock.
• The six-month minimum delay for closing without Parent's consent introduces a period of uncertainty for the transaction's completion.
• The termination fee associated with a 'Superior Proposal' could deter other potential bidders, limiting the Issuer's flexibility to pursue higher offers.

Risks

• The consummation of the Mergers is subject to certain customary conditions, including the Required Issuer Stockholder Approval, which, if not obtained, could lead to the termination of the Merger Agreement.
• The Merger Agreement may be terminated if the closing has not occurred on or before the twelve-month anniversary of the agreement date (End Date), introducing a time-based risk.
• The Issuer may be required to pay a termination fee if it terminates the Merger Agreement to enter into an agreement for a Superior Proposal, or if Parent terminates due to an adverse recommendation change by the Issuer's board.
• The value of the merger consideration (Parent common stock) is subject to market fluctuations, meaning the final value received by Bridge shareholders could differ from the implied value at the time of the agreement.

Future Outlook

The document outlines the definitive steps for Bridge Investment Group to merge with Apollo Global Management, with the transaction expected to close two business days after all conditions are met or waived, but not before six months from the Merger Agreement date without Parent's consent. The future operations of the Issuer and OpCo will be as wholly-owned subsidiaries of Apollo, with their officers and directors potentially remaining in place at Apollo's discretion.

Management Comments

• The Issuer's board of directors, acting upon the direction of a special committee comprised solely of independent directors, was involved in reviewing, evaluating, and negotiating strategic opportunities for the Issuer, leading to the Merger Agreement.

Industry Context

This merger represents a significant consolidation within the alternative asset management industry, where larger players like Apollo Global Management are expanding their platforms through strategic acquisitions. It reflects a trend towards scale and diversification in an increasingly competitive and complex financial landscape, allowing Apollo to potentially integrate Bridge's specialized investment strategies and client base into its broader offerings.

Comparison to Industry Standards

• The acquisition of a specialized investment manager like Bridge Investment Group by a global alternative asset manager such as Apollo Global Management is consistent with industry trends where larger firms seek to expand their asset under management (AUM) and diversify their product offerings. For example, Blackstone has similarly expanded its real estate and credit platforms through various acquisitions and strategic partnerships.
• The stock-for-stock consideration is a common structure in such mergers, allowing the acquiring company to conserve cash and the target's shareholders to participate in the combined entity's future growth, similar to how Ares Management has used stock in some of its strategic acquisitions.
• The inclusion of a Tax Receivable Agreement (TRA) in the merger terms is standard practice for companies that went public via an Up-C structure, like Bridge, to address the tax benefits realized by the acquiring entity from pre-IPO tax attributes. This is a common feature seen in many private equity-backed public companies' merger agreements.
• The requirement for a special committee of independent directors to approve the transaction is a best practice in corporate governance for related-party transactions or transactions where management has a significant stake, ensuring fairness to all shareholders, a practice observed in numerous public company mergers.

Management Changes

Corporate Governance

Related Party Transactions

• The Second Amended and Restated Tax Receivable Agreement involves the Issuer, OpCo, Parent, and certain beneficiaries party to the original TRA, including certain of the Reporting Persons (TRA Members). This agreement modifies the terms of tax-related payments to these related parties.
• Separate Voting Agreements were entered into by each of the Reporting Persons and certain of their respective affiliates (Specified Stockholders) with the Issuer, OpCo, Parent, and the Merger Subs. These agreements commit these significant shareholders to vote in favor of the merger and restrict their ability to transfer shares, directly impacting their holdings and the transaction's outcome.

Stakeholder Impact

• Shareholders: Class A and Class B common stockholders will receive shares of Apollo Global Management common stock, transitioning their investment into the acquiring entity.
• Employees: Employees holding Issuer RSU Awards, Issuer Restricted Stock Awards, and OpCo Class A Awards will have their equity converted into comparable Parent equity awards, subject to the same vesting terms, ensuring continuity of their incentive structures.
• Non-employee directors: Unvested Issuer Restricted Stock Awards held by non-employee directors will become fully vested immediately prior to the merger, providing them with immediate realization of their equity compensation.
• TRA Members (including certain Reporting Persons): Their rights under the Tax Receivable Agreement are modified, foregoing accelerated payments and linking future payments to Parent's consolidated tax liability, impacting their long-term financial benefits from tax attributes.
• Creditors: The document does not explicitly detail the impact on creditors, but the change in ownership to a larger entity like Apollo could potentially alter the credit profile of the surviving entities.
• Management: Current officers of the Issuer and OpCo are expected to remain officers of the Surviving Corporation/LLC, subject to Parent's discretion, indicating potential continuity in leadership roles.

Next Steps

• Obtain the Required Issuer Stockholder Approval (affirmative vote of holders representing at least a majority of the aggregate voting power of outstanding Common Stock).
• Satisfy or waive other customary closing conditions outlined in the Merger Agreement.
• Proceed with the Corporate Merger and LLC Merger, resulting in the Issuer and OpCo becoming wholly-owned subsidiaries of Apollo Global Management.
• The Second A&R Tax Receivable Agreement will become effective immediately prior to the Effective Time of the merger.

Key Dates

Keywords

Merger Agreement, Apollo Global Management, Bridge Investment Group Holdings Inc., SEC Filing, Schedule 13D, Class A Common Stock, Class B Common Stock, Stock Exchange Ratio, Tax Receivable Agreement, Voting Agreement, Corporate Acquisition, Asset Management, Private Equity