Ares Management LP (NYSE: ARES) and Kayne Anderson Capital Advisors LP have terminated their merger agreement, saying that the companies had different views about the merger because of the state of the energy market, which has remained volatile since the deal was announced in July.
"While we continue to strongly believe in Kayne and the long-term energy investment opportunity, it became clear this was not the right time to bring together our cultures and business models into a merged public company," says Ares CEO Tony Ressler.
Under the terms of the original $2.5 billion transaction, the firms would have combined into a large, diversified asset manager with $113 billion in assets under management. Though the deal has been terminated, Ares announced it would invest $150 million in Kayne's energy activities.
Los Angeles-based Kayne is an alternative asset management firm that invests in energy and energy infrastructure, specialized real estate, middle market credit and private equity.
The two plan to keep an eye out for collaborative marketing opportunities, including jointly managing separately managed accounts, and other products, they say.
Although it wasn't Ares' original plan, the firm joins a handful of others that have also made asset management investments. Earlier in October, NorthStar Asset Management Group Inc. (NYSE: NSAM) picked up a majority stake in GTCR-backed the Townsend Group for $380 million, and before that, Hellman & Friedman LLC grabbed a stake in Edelman Financial Services.
The low but fluctuating price of crude oil has spurred both M&A and bankruptcy activity as certain companies seek less-expensive investment opportunities and others struggle. Recent deal announcements in the energy sector include Duke Energy Inc.'s (NYSE: DUK) deal for Piedmont Natural Gas Co. (NYSE: PNY), and Energy Transfer Equity LP's purchase of Williams Cos.
For more on the energy sector, see Investors Flow Into Oil & Gas and check out the energy edition of Mergers & Acquisitions Mid-Market Pulse, a forward-looking sentiment indicator derived from monthly surveys of approximately 250 executives and published in partnership with McGladrey LLP.