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Fortress Soars 28% and Into Wednesday's Top 10 Gainers on SoftBank Buyout

Shares of Fortress Investment Group LLC FIG are surging on Wednesday. In late-afternoon trading, the stock is up 28.5% to $7.99 per share since the opening of the market, after the definitive merger agreement with SoftBank Group Corp. SFTBY was settled on Tuesday, Feb. 14, 2017.

SoftBank, a Japanese technology giant, has agreed to buy Fortress Investment, an U.S. based private equity firm, for $3.3 billion in cash. The merger resulted in $8.08 per share in cash for Fortress Investment's shareholders, which is 39% premium to Monday's closing price on Feb. 13.

It may seem strange for a technology company to purchase an investment firm but being unpredictable has always been a trait of Masayoshi Son, the CEO of SoftBank. For example, SoftBank purchased control of Sprint Corp. S , a U.S. mobile-phone carrier in 2013 and ARM Holdings PLC, a U.K. designer of microprocessors, in September of 2016.

The acquisition of Fortress Investment will turn SoftBank into one of the biggest alternative asset managers in the world. Currently, Fortress manages about $70 billion in real estate, credit, and private equity. The company will continue to operate from its headquarters in New York and as an independent business within Softbank.

Executives Pete Briger, Wes Edens, Randy Nardone and Fortress' senior investment professionals have all agreed to stay. Further more, the executives have committed to investing 50% of their after-tax proceeds from the transaction into Fortress' funds for investing and operation.

"Fortress' excellent track record speaks for itself, and we look forward to benefitting from its leadership broad-based expertise and world-class investment platform," said Mr. Son in the press release.

In addition to the $8.08 per share, Class A Fortress shareholders could potentially receive up to two regular quarterly dividends prior to the closing, each in an amount not to exceed $0.09 per share. The company not only plans to maintain the amount for the fourth quarter of 2016 and also for the first quarter of 2017, if closing does not occur prior to the applicable payment date.

"We join a company with tremendous scale and resources, and a culture completely aligned with our focus on performance, service and innovation," said Co-Chairmen Pete Briger and Wes Edens. "We anticipate substantial benefits for our investors and business as a whole."

It certainly looks like the market agrees as well.

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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.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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