Ares Management and energy manager Kayne Anderson Capital Advisors have mutually agreed to terminate their merger agreement, the companies announced in a joint news release Tuesday.
Ares had previously announced in July its plans to purchase Kayne Anderson in a $2.55 billion deal paid for with Ares operating group units.
The news release cited different views between the two companies as to “how best to proceed with the business combination in response to current market conditions in the energy sector.”
The price of oil has fallen 9.2% since July 23, the date the merger was announced.
“There is no question, Kayne is an industry leader in energy, energy infrastructure, real estate and other asset classes,” said Tony Ressler, Ares’ chairman and CEO, in the news release. “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. I look forward to investing with Kayne and am pleased we are finding alternative means to benefit from our complementary strategies and networks.”
Ares and some of its principals will now invest $150 million in Kayne Anderson’s funds. According to Ares’ 8-K filing to the Securities and Exchange Commission, Ares is investing $50 million each in Kayne Anderson Energy Fund VII and Kayne Private Energy Income Fund, and will also invest $50 million in either MLP/Midstream, a separate account that will invest in master limited partnership marketable securities and midstream energy companies, or one or more commingled hedge funds.
When the purchase was announced, the firms said the combined entity would have been called Ares Kayne Management LP. Ares and Kayne Anderson had $88 billion and $22 billion in assets under management, respectively, as of Sept. 30.
Kayne Anderson spokesman Paul Blank and Ares spokesman Bill Mendel declined comment.