Medley Management Inc. (NYSE: MDLY) rose sharply Friday after Sierra, Medley Capital, and Medley Management agreed to merge to create one internally managed Business Development Company.
A news release out Thursday said Sierra will acquire MDLY, and MDLY’s existing asset management business will operate as a wholly-owned subsidiary of Sierra. The Boards of Directors of Sierra, MCC and MDLY unanimously approved the transactions based on recommendations of independently advised special committees of independent directors at each company, respectively.
The release went on to say the combined company will have over $5 billion of assets under management, including $2 billion of internally managed assets. Sierra is expected to be the second-largest internally managed BDC and the seventh largest publicly traded BDC.
MCC shareholders will receive 0.8050 shares of Sierra Common Stock for each share of MCC Common Stock.
MDLY Class A shareholders will receive 0.3836 shares of Sierra Common Stock for each Medley Class A share, $3.44 per share of cash consideration and $0.65 per share of special cash dividends.
Medley LLC Unitholders have agreed to convert their units into MDLY Class A Common Stock, and will receive 0.3836 shares of Sierra Common Stock for each MDLY Class A share, $3.44 per share of cash consideration and a $0.35 per share special cash dividend.
As part of the transaction, Medley LLC Unitholders have agreed to forgo all payments that would be due to them under the existing Tax Receivable Agreement with Medley for the benefit of the combined company.
Shares skyrocketed $1.50, or 42.9%, to $5.00 early Friday.
