Cantor Pushes for Price Cut on UBS O’Connor Deal

Cantor Pushes for Price Cut on UBS O’Connor Deal

Cantor Fitzgerald Seeks to Renegotiate UBS O’Connor Deal After First Brands Bankruptcy.

The completion of UBS’s sale of its US hedge fund unit O’Connor to Cantor Fitzgerald was originally scheduled for the fourth quarter. But the bankruptcy of US auto parts maker First Brands could now throw a wrench into the process.

According to media reports, Cantor Fitzgerald is seeking to renegotiate certain terms of the O’Connor acquisition following the collapse of First Brands. The aim of the discussions is reportedly to exclude hedge fund strategies most exposed to bankruptcy from the deal and to negotiate a lower overall purchase price, «Bloomberg» reported.

Heavy Exposure to First Brands

The bankruptcy has significantly impacted the UBS Working Capital Finance Opportunistic Fund, which was launched by O’Connor. According to the «Financial Times», approximately 9.1 percent of the fund’s invested assets were directly linked to First Brands, with an additional 21.4 percent exposed indirectly.

Court filings cited by «Bloomberg» indicate that O’Connor held a $116.1 million claim against First Brands related to supply chain finance.

Closing Still Planned for Q4

The sale of O’Connor to Cantor Fitzgerald was announced in May, with the transaction expected to close in the fourth quarter. Despite the latest complications, sources told «Bloomberg» that a complete collapse of the deal remains unlikely.

According to the bankruptcy petition filed at the end of September, First Brands’ total liabilities exceed $10 billion. UBS’s total exposure through its investment entities is said to amount to roughly 500 million francs. US investment bank Jefferies is also reportedly among the hardest hit, with exposure of around $715 million.