Ares Management Corp. ARES has agreed to acquire the international business of GLP Capital Partners Limited and certain of its affiliates, excluding its operations in Greater China (“GCP International”). The transaction is valued at $3.7 billion.
Details of the Acquisition Pursued by ARES
Per the agreement, Ares Management will pay roughly $1.8 billion in cash and $1.9 billion through its Class A shares. The deal, which includes long-term performance incentives, is structured to align GCP International's leadership with the interests of fund clients and ARES stockholders.
The deal, anticipated to be completed in the first half of 2025, is subject to requisite regulatory approvals. Upon the closure of the deal, GCP International will be separated from GLP Capital Partners’ remaining business and will operate under ARES.
GCP International is a global alternative asset management firm with roughly 29 offices globally and a significant presence in major geographies, including Japan, Europe and the United States. As of June 30, 2024, GCP International had roughly $44 billion of assets under management (AUM).
The combined entity is anticipated to have roughly $492 billion of AUM (nearly doubling its AUM across North America, Europe, Asia, and Latin America to roughly $96 billion) with more than 50 global offices.
Michael Steele, president of GCP International, along with key executives, will move to Ares Management as part of the deal. These teams will continue to manage funds and operations across regions like Japan, Europe, the United States, Brazil and Vietnam.
Ares Management’s Rationale Behind the Acquisition
The deal is anticipated to be modestly accretive to after-tax realized income per share of Class A and non-voting common stock in the first full calendar year after the acquisition with meaningful accretion synergies to be anticipated in 2026 and beyond.
This transaction is likely to improve the overall earnings mix through 100% fee-related earnings contribution in the initial years. Further, it will enhance the diversification of ARES’ AUM in terms of asset class and geographical concentration.
The deal will establish Ares Real Estate in a leading position with one of the largest global vertically integrated platforms. This aims to tap into the growth in industrial space and AI data center demand driven by secular tailwinds.
Bill Benjamin and Julie Solomon, co-heads of Ares Real Estate, stated, “Combining our platforms will further enhance our strong position in the industry and bolster Ares as aglobal marketleader in real estate with vertically integrated capabilities.”
This move aligns with the company’s inorganic growth strategy. Last month, Ares Management agreed to acquire Walton Street Capital Mexico S. de R.L. de C.V. and certain of its affiliates, a leading real estate asset management platform focused primarily on the Industrial sector. The deal, which is anticipated to be completed in the fourth quarter of 2024, will be immediately accretive to Ares’ after-tax realized income per share of Class A and non-voting common stock.
ARES’ Zacks Rank & Price Performance
Year to date, shares of Ares Management have risen 29% compared with the industry’s growth of 23.6%.
Image Source: Zacks Investment Research
Currently, ARES carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Similar Steps by Other Finance Firms
Last week, BlackRock, Inc. BLK acquired a private equity company, Global Infrastructure Partners (“GIP”).
This acquisition has created an industry leader in infrastructure, spanning equity, debt, and solutions and offering a wide variety of infrastructure sector knowledge and exposure in existing and emerging economies. The combined infrastructure platform is likely to brand as Global Infrastructure Partners, a division of BlackRock.
GIP's exclusive origination and business improvement capabilities, combined with BlackRock's worldwide corporate and sovereign contacts, create a platform for diversified, large-scale sourcing to support client deal flow and co-investment opportunities.
Similarly, LPL Financial Holdings LPLA, along with its subsidiaries LPL Financial LLC, has completed the acquisition of Altria Wealth Solutions, Inc.
Per the acquisition announced on Feb. 13, 2024, LPLA expected onboarding and integration costs to be between $300 million and $350 million. Despite these expenses, the long-term financial projections are promising, with LPLA anticipating additional earnings of $140 million annually from the deal.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
