Filed
by Rodman & Renshaw Capital Group, Inc.
Pursuant to Rule 425 under the
Securities Act of 1933
and
deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of
1934
Subject Company: Cowen
Group, Inc.
Commission File
No.: 001-33737
This
filing relates to a proposed business combination between Rodman & Renshaw
Capital Group, Inc. (“Rodman”) and Cowen Group, Inc. (“Cowen”).
This
communication does not constitute an offer to sell or the solicitation of an
offer to buy any securities or a solicitation of any vote or
approval. This material is not a substitute for the prospectus/proxy
statement Rodman would file with the SEC if an agreement between Rodman and
Cowen is reached or any other documents which Rodman may file with the
Securities and Exchange Commission (“SEC”) and send to Cowen and Rodman
shareholders in connection with the proposed transaction. INVESTORS
AND SECURITY HOLDERS OF COWEN AND RODMAN ARE URGED TO READ ANY SUCH DOCUMENTS
FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION.
Investors
and security holders will be able to obtain free copies of any documents filed
with the SEC by Rodman through the website maintained by the SEC at www.sec.gov. Free
copies of any such documents can also be obtained by accessing the Investor
Relations section of Rodman’s website at www.rodm.com or
directing a request to Investor Relations, Rodman & Renshaw Capital Group,
Inc., 1251 Avenue of the Americas, New York, New
York 10020.
Rodman
and its directors and executive officers and other persons may be deemed to be
participants in the solicitation of proxies in respect of the proposed
transaction. Information regarding Rodman’s directors and executive
officers is available in its Annual Report on Form 10-K for the year ended
December 31, 2007, which was filed with the SEC on March 14, 2008, and its proxy
statement for its 2008 annual meeting of stockholders, which was filed with the
SEC on October 1, 2008. Other information regarding the participants
in a proxy solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in any proxy
statement/prospectus filed in connection with the proposed
transaction.
Statements
in this communication that are “forward-looking statements” are based on current
expectations and assumptions that are subject to risks and
uncertainties. Actual results could differ materially because of
factors such as Rodman’s ability to achieve the synergies and value creation
contemplated by the proposed transaction, Rodman’s ability to promptly and
effectively integrate the businesses of Rodman and Cowen, the timing to
consummate the proposed transaction and any necessary actions to obtain required
regulatory approvals, and the diversion of management time on
transaction-related issues. For further information regarding risks
and uncertainties associated with Rodman’s business, please refer to the
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and “Risk Factors” sections of Rodman’s SEC filings, including, but
not limited to, its annual report on Form 10-K and quarterly reports on Form
10-Q, copies of which may be obtained by contacting Rodman’s Investor Relations
department at (212) 356-0500 or at Rodman’s website at http://www.rodm.com.
All
information in this communication is as of the date hereof. Rodman
undertakes no duty to update any forward-looking statement to conform the
statement to actual results or changes in the company’s
expectations.
# #
#
INVESTOR
PRESENTATION DATED DECEMBER 15, 2008
December
15, 2008
Proposed
Merger with Cowen Group, Inc.
Creating
the Leading Investment Bank for Growth Companies
1
Disclaimers
Forward-Looking
Statements
This
presentation includes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995.
These forward-looking statements include, for example, statements regarding the expected timetable for the proposed
transaction, benefits and synergies of the proposed merger, integration plans, future opportunities for the combined company,
and any other statements regarding future expectations, beliefs, goals or prospects. There are a number of risks and uncertainties
that could cause actual results to differ materially from the forward-looking statements made herein. The factors that could cause
actual results to differ materially from these forward-looking statements include the ability to achieve the benefits and synergies
contemplated by the proposed transaction, the ability to promptly and effectively integrate the businesses of Rodman & Renshaw
Capital Group, Inc. (“Rodman”) and Cowen Group, Inc. (“Cowen”), and the timing to consummate the proposed transaction and
obtain required regulatory approvals, including, but not limited to, those discussed in (1) Rodman’s Annual Report on Form 10-K
for the year ended 12/31/07 in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 10; (2) Rodman’s Quarterly Report
on Form 10-Q for the quarter ended 06/30/08 in (a) Part II, Other Information, ITEM 1A. Risk Factors and (b) Part I, Financial
Information, ITEM 1. Financial Statements: Note 7; (3) Rodman’s Quarterly Report on Form 10-Q for the quarter ended 09/30/08
(to be in (a) Part II, Other Information, ITEM 1A. Risk Factors and (b) Part I, Financial Information, ITEM 1. Financial Statements:
Note 7; and (4) other factors discussed in Rodman’s filings with the Securities and Exchange Commission (“SEC”), copies of which
may be obtained by contacting Rodman’s Investor Relations department at (212) 356-0500 or at Rodman’s website at
www.rodm.com. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of
the date of this filing. Rodman does not undertake any obligation to publicly release any revision to its forward-looking statements
to reflect events or circumstances after the date of this filing.
These forward-looking statements include, for example, statements regarding the expected timetable for the proposed
transaction, benefits and synergies of the proposed merger, integration plans, future opportunities for the combined company,
and any other statements regarding future expectations, beliefs, goals or prospects. There are a number of risks and uncertainties
that could cause actual results to differ materially from the forward-looking statements made herein. The factors that could cause
actual results to differ materially from these forward-looking statements include the ability to achieve the benefits and synergies
contemplated by the proposed transaction, the ability to promptly and effectively integrate the businesses of Rodman & Renshaw
Capital Group, Inc. (“Rodman”) and Cowen Group, Inc. (“Cowen”), and the timing to consummate the proposed transaction and
obtain required regulatory approvals, including, but not limited to, those discussed in (1) Rodman’s Annual Report on Form 10-K
for the year ended 12/31/07 in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 10; (2) Rodman’s Quarterly Report
on Form 10-Q for the quarter ended 06/30/08 in (a) Part II, Other Information, ITEM 1A. Risk Factors and (b) Part I, Financial
Information, ITEM 1. Financial Statements: Note 7; (3) Rodman’s Quarterly Report on Form 10-Q for the quarter ended 09/30/08
(to be in (a) Part II, Other Information, ITEM 1A. Risk Factors and (b) Part I, Financial Information, ITEM 1. Financial Statements:
Note 7; and (4) other factors discussed in Rodman’s filings with the Securities and Exchange Commission (“SEC”), copies of which
may be obtained by contacting Rodman’s Investor Relations department at (212) 356-0500 or at Rodman’s website at
www.rodm.com. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of
the date of this filing. Rodman does not undertake any obligation to publicly release any revision to its forward-looking statements
to reflect events or circumstances after the date of this filing.
Securities
Law
This
communication does not constitute an offer to sell or the solicitation of an
offer to buy any securities or a solicitation of any
vote or approval. This material is not a substitute for the prospectus/proxy statement Rodman would file with the SEC if an
agreement between Rodman and Cowen is reached or any other documents which Rodman may file with the SEC and send to
Cowen and/or Rodman stockholders in connection with the proposed transaction. Investors and security holders of Cowen and
Rodman are urged to read any such documents filed with the SEC carefully in their entirety when they become available
because they will contain important information about the proposed transaction.
vote or approval. This material is not a substitute for the prospectus/proxy statement Rodman would file with the SEC if an
agreement between Rodman and Cowen is reached or any other documents which Rodman may file with the SEC and send to
Cowen and/or Rodman stockholders in connection with the proposed transaction. Investors and security holders of Cowen and
Rodman are urged to read any such documents filed with the SEC carefully in their entirety when they become available
because they will contain important information about the proposed transaction.
Pro
Forma, Estimated, Third Party and Consensus Information
The
pro forma, estimated, third party or consensus numbers in this presentation are
for illustrative purposes only and may not
reflect actual results. The analysts' opinions, estimates or forecasts (and therefore the consensus earnings and pro forma
numbers) are theirs alone, are not those of Rodman, and shall not be deemed to be, or relied upon as, Rodman guidance or
estimates. As a matter of policy, Rodman does not publish guidance or estimates or comment on analyst models and the use of
this information in this presentation shall not be deemed in any manner to constitute Rodman's adoption of any analyst guidance
or estimates or confirmation of the validity of any analyst model.
reflect actual results. The analysts' opinions, estimates or forecasts (and therefore the consensus earnings and pro forma
numbers) are theirs alone, are not those of Rodman, and shall not be deemed to be, or relied upon as, Rodman guidance or
estimates. As a matter of policy, Rodman does not publish guidance or estimates or comment on analyst models and the use of
this information in this presentation shall not be deemed in any manner to constitute Rodman's adoption of any analyst guidance
or estimates or confirmation of the validity of any analyst model.
2
• By exploiting
identified macro-trends, Rodman has continued to expand its PIPEs
platform
• Our
strategy:
§ Continue to grow
in our core sectors
§ Expand our product
base
§ Broaden our
geographic footprint
§ Broaden our
potential sources of revenue
§ Remain focused on
expense management
• Offices in New
York, Boston, Houston, Calgary, and affiliate in London
• Acquisitions in
2008 to broaden sector coverage (energy and metals & mining), continue
to
diversify products and revenue sources (M&A and capital markets), and expand geographic
footprint
diversify products and revenue sources (M&A and capital markets), and expand geographic
footprint
Rodman
& Renshaw Capital Group, Inc. (NASDAQ: RODM)
A
full service investment bank dedicated to providing investment banking services
to growth
companies that have significant recurring capital needs
companies that have significant recurring capital needs
3
Rodman
Financial Highlights
Despite
the Economic Environment, Rodman Was Profitable in 2007 and Year to Date
09/30/08
Nine
months ended 09/30/08 Highlights
• 22% operating
margin despite adverse market conditions(1,2)
• 45% compensation
ratio due to our variable compensation structure which aligns producer
compensation with productivity and performance(1)
compensation with productivity and performance(1)
• 33%
non-compensation ratio due to our prudent cash management and expense control
policies(2)
Strong
Balance Sheet with No Exposure to Toxic Financial Assets
• Liquid assets of
$31.9 million as of 09/30/08, consisting of unrestricted cash, restricted cash,
Level 1
assets, and current private placement and other fees receivable and due from clearing broker
assets, and current private placement and other fees receivable and due from clearing broker
(1) Excludes the cost
related to pre-IPO awards
(2) Excludes goodwill
impairment charge
4
Comparable
Industry Financial Results
Rodman’s
Cost Management Compared to Our Peers
5
Cost
as a Percentage of Revenue
Nine
Months Ended 09/30/08
6
• Cowen’s sector and
market cap focus compared to Rodman’s
§ Shared healthcare
focus
– Little overlap
with Rodman’s healthcare banking and research coverage
§ Cowen’s other
target sectors complement Rodman’s non-healthcare focus on energy and
metals/mining:
metals/mining:
– Aerospace &
Defense
– Alternative
Energy
– Consumer
– Technology
– Telecommunications
• Meaningful
presence on West Coast, Asia, and Europe
§ Complementary to
Rodman’s geographic footprint
• Focus on cash
equities/research franchise (low margins), equity capital markets; substantial
decline in
once-profitable PIPEs franchise
once-profitable PIPEs franchise
• Strong, liquid
balance sheet deteriorating due to recurring losses
§ Cash balance of
approximately $111.9 million, as of 09/30/08, less $34.7 million accrued for
bonus
payments(1)
payments(1)
§ Persistent losses
are steadily draining cash: $38.1 million net operating cash outflows
between
01/01/07 and 09/30/08(2)
01/01/07 and 09/30/08(2)
§ Current market
valuation/analysts’ estimates reflect expectation of indefinite continuing net
cash
outflows
outflows
Cowen
Group, Inc. (NASDAQ: COWN)
(1) Cowen’s Quarterly
Report on Form 10-Q for the period ended 09/30/08 as filed
with the SEC
(2) Cowen’s SEC
filings
7
Cowen’s
PIPE Practice (2004 - 2008 Annualized)
Cowen’s
PIPE practice has declined substantially, even though PIPEs are a growing,
profitable and counter-
cyclical product attractive to Cowen’s target sectors
cyclical product attractive to Cowen’s target sectors
8
Revenue
Impact of Cowen’s Recent PIPEs Performance
Cowen’s
Investment Banking Revenue and PIPE Allocation
9
Strategic
Benefits of the Proposed Combination
Broad
Sector Coverage for Combined Firm
• Market leader in
Life Science / Healthcare
• Expanded platform
in Alternative Energy, Metals & Mining, and Energy
• Retained presence
in Consumer, Aerospace & Defense and TMT
Product
and Revenue Expansion
• Restore PIPEs
revenue to Cowen’s existing Healthcare client base
• Drive PIPEs
revenue in new sectors
• Enhanced capital
markets, research, sales and trading services across Rodman’s existing client
base
Geographic
Footprint
• Expanded footprint
within North America through offices in Houston, Calgary and superior West
Coast
coverage
coverage
• Leverage Cowen’s
infrastructure in Asia and Europe with existing Rodman relationships and
pipeline
Reap
the benefits of combined Finance, Mergers & Acquisitions, Research and Sales
& Trading platforms
Principal
investment activities are complementary with no overlap
10
Benefits
of Implementing Rodman’s Model to Expense Management
• Change mindset by
bringing in a management team with meaningful equity stake
§ Increased
alignment of interest between management and stockholders
• Remove layers of
redundant staff and management
• Align producer
compensation with productivity and performance
• Migrate Rodman’s
approach to non-compensation expense
§ IT
§ Business
development
§ Data
management
• Improve cash
management and expense control
11
Summary
of Proposal, Financial Assumptions and Conditions to Closing
|
Proposal
price:
|
|
• $7.00 per
share
|
|
Consideration:
|
|
• 50% cash /
50% stock for all outstanding shares of Cowen common stock
|
|
Cost
savings:
|
|
• Annual cost
savings of approximately $36.5 million in 2009 and $38.4 million
in
2010 |
|
Income
enhancements: |
|
• Contribution
from revenue enhancements expected to generate $18.0 million of
pro-forma pretax income for 2009 with 12% growth thereafter |
|
Conditions
to
closing: |
|
• Due
diligence
• Definitive
merger agreement
• Regulatory
approval - - HSR and typical broker / dealer
• Stockholder
approval - - Rodman and Cowen
|
12
Pro
Forma Assumptions
|
Transaction
close:
|
|
• February 28,
2009
|
|
Share
price:
|
|
• Based on
Rodman’s closing share price of $1.18, as of Monday, December 8,
2008
|
|
EPS
estimates (1)
|
|
• I/B/E/S net
income and EPS estimates based on 2009 consensus estimates as
published by Thomson Reuters • Net income
and EPS projected at a long-term growth rate of 12% in 2010
|
(1) Applies to both
Rodman and Cowen
13
Financing
Net
Share Settlement Convertible Note
• Principal ($50mm)
settled in cash
• Conversion spread
settled in common stock
§ Treasury stock
method - beneficial EPS impact
• Coupon less than
7%
• Modest conversion
premium of more than 10%
• Limited warrant
coverage
• Term - two years
or less
Other
Financing Option(s)
• Following public
announcement of proposal on December 8, 2008, substantial expressions of
interest in
strategic common equity investment into Rodman, which could provide all or part of required financing
strategic common equity investment into Rodman, which could provide all or part of required financing
Proposed
financing facilitates meaningfully accretive transaction, with modest debt
service and healthy,
liquid balance sheet post-combination
liquid balance sheet post-combination
14
Estimated
Transaction Cost Savings
15
Accretion-Dilution
16
Pro
Forma Balance Sheet (1)
17
Appendix:
Rodman Historical Income Statement
New
York:
1251
Avenue of the Americas
20th
Floor
New
York, NY 10020
212.356.0500
Member
FINRA, SIPC
Houston:
1001
Fannin
Suite
550
Houston, TX
77002
713.654.8080
Calgary:
304 -
8th Avenue
SW
Suite
501
Calgary, AB T2P
1C2
403.237.9462
Boston:
225
Franklin Street
26th
Floor
Boston, MA
02110
617.217.2215
London
(affiliated firm, RCP):
One
Great Cumberland Place
London W1H
7AL
United
Kingdom
+44.20.7569.0044
www.rodm.com