U.K. hedge fund to buy Refco Inc.

Man Group’s bid tops four others Refco seeks approval of offer

NEW YORK—

Man Group PLC, the world’s largest publicly traded hedge fund firm, yesterday won an auction for the futures business of broker Refco Inc., which filed for bankruptcy protection last month after an accounting scandal. Man Financial, the brokerage unit of London- based Man Group, outbid up to four others as it agreed to pay $282 million ( U. S.) in cash for the customer accounts and employees of Refco’s regulated futures brokerage in the United States, Britain, Canada and Asia.

Refco, formerly the largest independent futures and commodities brokerage in the United States, will seek approval of the offer from the U. S. bankruptcy court. “ The transaction . . . gives us the opportunity to integrate Refco’s high quality staff into our existing brokerage business,” said Stanley Fink, chief executive of Man Group, in a statement. Man Group said the deal also includes the assumption of an estimated $37 million in liabilities and other considerations valued at $4 million, making the total value $323 million.

Although the offer seems a lot smaller than previous offers, it excludes Refco’s net regulatory capital of about $746 million, which Refco will retain. Man is only buying the assets of the unit. Net regulatory capital was used as the basis for previous offers for Refco’s futures arm, which reached $858 million. But Man said the purchase price could fall, depending on whether customers continue to leave Refco.

It will give further details of the acquisition and its integration plan on Nov. 17 when it releases its interim results.

In the three weeks after the scandal involving its chief executive broke, sparking an exodus of customers, Refco’s customer accounts sank from $ 7.5 billion to just over $3 billion. It is unclear how much remains in the accounts. Analysts said the deal appeared to make sense, and Man’s shares ended up 2.6 per cent at around £ 16.87 yesterday.