Highbury Financial Inc. (OTCBB: HBRF) and Affiliated Managers Group, Inc. (NYSE: AMG) have entered into a definitive merger agreement whereby AMG will acquire Highbury. Under the terms of the agreement, AMG would issue an aggregate of up to 1,748,879 shares of AMG common stock in exchange for all of the outstanding equity of Highbury.
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In addition, shortly before the closing, which is expected to occur in the second quarter of 2010, Highbury expects to pay a special cash dividend to its common and preferred stockholders in an aggregate amount equal to its working capital in excess of $5 million. Assuming an April 30, 2010 closing, this special dividend is estimated to be in the range of $0.34 to $1.09 per Highbury share (calculated including the shares of Highbury's Series B Convertible Preferred Stock on an as converted basis) depending on the number of outstanding warrants of Highbury exercised prior to closing. Based on an AMG stock price of $66.90 (which was determined using the average closing sales price of AMG shares over the 25 trading days ending December 11, 2009) the transaction values the Highbury common stock at $6.10 to $6.33 per share depending on the number of outstanding warrants of Highbury exercised prior to closing, although the actual value will depend on the AMG stock price at the time of the closing.
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