Colony Capital in talks to buy NorthStar

The Los Angeles-based investment manager is in exclusive talks to merge with the New York-based global asset management firm.

Colony Capital and NorthStar Realty Finance announced Friday that they have entered into exclusive negotiations to acquire NorthStar Asset Management, the New York-based global asset management firm. In a statement, Colony, NorthStar Asset Management and NorthStar Realty Finance said the talks involved a joint proposal from Colony and NorthStar Realty Finance for “a tri-party all-stock ‘at the market’ business combination.”

The three parties added: “The three companies believe that the combination would create a world-class diversified real estate and investment management equity REIT with significant scale, deep management talent, and the opportunity to generate substantial revenue and expense synergies.”

However, the deal is not guaranteed to occur and the terms of the deal, should it transpire, are not yet known, the three parties said. Interim updates on the progress of negotiations will not be provided, the three firms added.

In January, NorthStar Asset Management announced that it was considering strategic alternatives for the firm, including a potential sale as a result of devaluation in its share price. “We believe our current share price undervalues the Company,” executive chairman David Hamamoto said in a statement at the time. “Our board of directors and management have always been committed to acting in the best interests of our shareholders and we are aggressively seeking ways to maximize shareholder value.”

The firm spun out of NorthStar Realty Finance in 2014 and managed $38 billion in real estate assets as of December 31, according to its website. In January, NorthStar Asset Management bought an approximately 84 percent stake in The Townsend Group from Chicago-based private equity firm GTCR for about $383 million.

Colony Capital itself became a public company in April 2015 when it combined with its publicly-traded mortgage real estate investment trust, Colony Financial.

Bloomberg first reported Friday that Colony was nearing a deal to buy NorthStar Asset Management.