Personal Finance

Why Shares of Fortress Investment Group LLC Are Surging

Man placing money in suit pocket

What happened

Shares of Fortress Investment Group LLC (NYSE: FIG) are trading higher by about 29% as of 10:30 a.m. EST after the company announced it would be acquired by SoftBank (NASDAQOTH: SFTBF) , a Japanese conglomerate.

So what

Fortress shareholders stand to collect $8.08 per share in cash, a roughly 39% premium to the closing price on Feb. 13. They could receive up to two more quarterly dividends in the amount of $0.09 per share prior to closing, bringing the total haul to $8.26 per share.

Executives Pete Briger, Wes Edens, and Randy Nardone are committed to staying with the company. Each signed a five-year employment contract and will invest 50% of their after-tax proceeds from the transaction into Fortress-managed investment products.

The company went public just over 10 years ago at $18.50 per share, nearly doubling in its debut to trade at $35 at market open. The IPO was well timed, capitalizing on the market's exuberance for all things financial. By late 2008, however, shares traded for less than $1.00 as Fortress was pummeled by the financial crisis.

Man placing money in suit pocket

Image source: Getty Images.

Now what

With 34.99% ownership among Briger, Edens, and Nardone, the three all but guarantee that that deal will receive sufficient shareholder support. At a current market price of $7.98 per share, the company trades at a mere 1.2% discount to the acquisition price. Including two dividends along the way, the discount widens but only to 3.4%. The market clearly believes the deal should close on the anticipated timeline in the second half of 2017.

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Jordan Wathen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

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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