Ares Management Buying Kayne Anderson for $2.55B

Ares Management L.P., a leading global alternative asset manager, announced this week that it has agreed to buy Kayne Anderson Capital Advisors L.P. for $2.55 billion, creating one of the nation's largest and most diversified alternative asset managers with a combined $113 billion of assets under management. The two firms, which are headquartered one block from each other in Los Angeles, will operate as Ares Kayne Management, L.P. with Kayne Anderson Chairman and Founder Richard Kayne and Ares Management Chairman and CEO Ressler serving together as Co-Chairmen. The transaction is expected to close on or around January 1, 2016, subject to customary regulatory approvals, investor consents and other closing conditions.

"We have long known and admired Kayne Anderson as an industry leader in energy, energy infrastructure, real estate and other asset classes, and this merger will make us a differentiated investment manager with five market-leading businesses. We expect the combination will make us better investors by greatly enhancing our expertise in these compelling sectors and will create new opportunities as we leverage each other's complementary investor bases to expand our distribution," said Tony Ressler, Ares Chairman and CEO in a press release. "In addition, Kayne Anderson adds long-lived capital and significantly increases our fee-related earnings, which we expect will make this merger meaningfully accretive to Ares' unit holders."

Ares will pay $2.55 billion to Kayne Anderson's owners, consisting of $500 million to $750 million in cash and 94.7 million to 107.9 million partnership stock units, according to a regulatory filing Friday. According to a Bloomberg Business report, employees of Ares will own about half of the new company and Kayne Anderson employees approximately 30%, Tony Ressler said on a conference call Friday. As a condition of the merger, Kayne Anderson employees will be restricted from transferring equity from the transaction until May 2016 and will be subject to a lockup on sales through 2021, reported GlobeSt. Ares employee unit holders will be subject to similar restrictions.

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