Ares Management (ARES) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of GCP International expands capabilities in industrial real estate, data centers, and self-storage across Japan, Europe, the U.S., Brazil, and Vietnam, excluding China, targeting high-growth sectors like e-commerce, AI, and clean energy.

• Enhances global scale, product suite, and geographic reach, positioning the combined entity as a top three global real asset manager with over $112 billion in AUM and nearly doubling real estate AUM to $96 billion.

• Provides entry into the Japanese market, strengthens presence in digital infrastructure and climate-related assets, and deepens relationships with key investors.

• Strong cultural alignment and long-standing relationships between management teams support integration and growth.

• Expands vertical integration and diversification across asset classes and geographies, supporting long-term demand tailwinds.

Financial terms and conditions

• Upfront consideration totals $3.7 billion: $1.9 billion in stock and $1.8 billion in cash, including $160 million for GP interests at NAV, subject to adjustment at closing.

• Earn-out provision up to $1.5 billion, payable primarily in Ares Class A common stock, based on fundraising and revenue targets through 2027.

• Cash portion funded from available cash and committed debt, including a $2 billion bridge facility.

• Majority of consideration to GCP International management and employees paid in Ares stock, subject to long-term retention mechanisms.

• GCP International expected to generate ~$200 million in FRE in the first 12 months post-closing, with a forward FRE multiple of 17.5x (or 15x excluding data center drag).

Synergies and expected cost savings

• Identified cost and revenue synergies, including new product launches, leveraging clean energy capabilities, and integrating investment, development, and operating functions.

• Data center business expected to become highly profitable by 2027, driving significant future FRE growth.

• Enhanced institutional fundraising capability and cross-selling opportunities with a broader investor base.

• Anticipated to be financially accretive on a Fee Related Earnings (FRE) and Realized Income (RI) basis in the first full calendar year, with higher accretion expected in future years.

• Deal structure incentivizes leadership and investment teams through significant stock consideration and earnout provisions.