SocGen sells TCW to Carlyle, management

Carlyle Group and the management of TCW Group, an asset management firm, signed a definitive agreement to acquire TCW from French bank Société Générale SA, the firms said Thursday, Aug. 9. Terms of the deal were not disclosed, but a source familiar with the matter said bids for TCW were in the $700 million range.

The target has about $130 billion in assets under management, including $42 billion in mutual funds under the MetWest and TCW Fund families. TCW clients include many of the largest U.S. corporate and public pension plans, financial institutions, endowments and foundations, as well as a substantial number of foreign investors and high-net-worth individuals.

In 2001, Société Générale said it would exchange 14.1 million shares, or $880 million, for an initial 51% of TCW, giving TCW's staff about 3.3% of the French bank and valuing the target at around 16 times Ebitda.

Société Générale then acquired an additional 19% of TCW in four tranches between 2003 and 2006 in a performance-related share swap worth a minimum of $320 million.

As part of the transaction, TCW management and employees will increase their ownership in the firm to around 40% on a fully diluted basis from around 17%.

Washington-based Carlyle said the acquisition was not strategic, but instead part of its private equity business. The firm said it acquired TCW via its Carlyle Global Financial Services Partners LP, a $1.1 billion financial services fund, and Carlyle Partners V, a $13.7 billion U.S. buyout fund.

A person familiar with the transaction said that the winner of the auction was decided some time ago, but that negotiations with TCW's management delayed the process. The deal is expected to close in the first quarter of 2013.

Other bidders in the running for TCW were Warburg Pincus and Clayton, Dubilier & Rice LLC, according to people familiar with the situation.

David Lippman, previously group managing director and head of fixed income at TCW, will be appointed president and CEO of the company, succeeding Marc I. Stern. Stern, currently vice chairman of TCW, will become chairman of the newly formed TCW board, Carlyle said.

Howard Marks, who formed Oaktree Capital Management LP in 1995 along with six partners, had worked at TCW since 1985. At TCW, Marks ran a high-yield bond fund and a convertible securities fund.

Société Générale said that this transaction is part of its plan to focus on core activities.

Carlyle's financial advisers were Bank of America Merrill Lynch's Steve Niemczyk, Filip Rensky, and Damon Clemow and Sandler O'Neill & Partners LP's senior managing principal Jimmy Dunne, managing directors Aaron Dorr and Chris Browne and associate Jason Greco. The firm's legal counsel was Simpson Thacher & Bartlett LLP's Lee Meyerson, Elizabeth Cooper and Chris Brown.

TCW's management team's financial adviser was Morgan Stanley with a team that included managing directors Gary Shedlin, Terry Sullivan and Guillaume Gabaix; its legal adviser was Debevoise & Plimpton LLP.

Skadden, Arps, Slate, Meagher & Flom LLP partners Ralph Arditi, David Hepp, and counsels Justin Askew and David Barrett were Société Générale's and TCW Group's legal advisers.

Société Générale's financial advisers were JPMorgan Securities LLC's Isabelle Seillier, Joel Chapellier, Mark Feldman and Paul Dabbar and its own investment banking division, Société Générale Corporate & Investment Banking.

-- David Carey, Paul Whitfield and Vyvyan Tenorio contributed to this report.