SCHEDULE: Saray Capital's Paramount Group Buyout Bid Rejected

Saray Capital's offer to acquire all outstanding shares of Paramount Group not already owned by its affiliates was rejected by the Board of Directors, citing an existing merger agreement.

Summary

• Saray Capital (DIFC) Ltd and Saray Value Fund SPC, collectively holding 5.39% of Paramount Group, Inc. common stock, made an offer on December 8, 2025, to purchase all shares not already owned by them and their affiliates.
• The offer was delivered to Paramount Group's Board of Directors.
• The Board of Directors determined on December 10, 2025, that Saray Capital's proposal is not reasonably likely to lead to a "Superior Proposal."
• This determination was made in the context of an existing Agreement and Plan of Merger dated September 17, 2025, involving Paramount Group, Paramount Group Operating Partnership LP, Rithm Capital Corp., and its subsidiaries.
• Saray Capital and Saray Value Fund SPC beneficially own 11,952,782 shares of Paramount Group Common Stock.
• The percentage ownership is calculated based on 221,919,163 shares outstanding as of November 4, 2025.

Sentiment

Score: 6

Explanation: The filing indicates a clear strategic direction for Paramount Group with an existing merger agreement, which provides certainty. However, the rejection of an unsolicited offer from a significant shareholder (Saray Capital) could introduce potential for shareholder dissent or further strategic actions from Saray Capital, creating some uncertainty for the stock price in the short term.

Positives

• For existing Paramount Group shareholders, the rejection of Saray Capital's offer in favor of an existing merger agreement with Rithm Capital Corp. suggests the Board believes the Rithm deal offers superior value or strategic alignment.
• The existing merger agreement with Rithm Capital Corp. provides a clear path forward for Paramount Group, potentially reducing uncertainty.

Negatives

• Saray Capital's attempt to acquire the remaining shares was unsuccessful, indicating a potential disagreement on valuation or strategic direction between Saray Capital and Paramount Group's Board.
• The rejection of a potential alternative offer might limit competitive bidding for Paramount Group, although the Board's rationale points to an existing "Superior Proposal" definition.

Risks

• Shareholders might perceive the Board's rejection of Saray Capital's offer as potentially limiting their options or not maximizing shareholder value if Saray's offer was considered attractive by some.
• There is a risk of potential shareholder activism or dissent from Saray Capital, given their significant stake and rejected offer.
• The existing merger agreement with Rithm Capital Corp. carries its own set of risks, which are not detailed in this filing but are implied by its existence.

Future Outlook

The filing indicates that Paramount Group's Board is committed to an existing merger agreement with Rithm Capital Corp., suggesting the company's future is tied to the successful completion of that transaction rather than a separate buyout by Saray Capital.

Management Comments

• The Board has determined the Proposal is not reasonably likely to lead to a 'Superior Proposal' for purposes of the Agreement and Plan of Merger, dated as of September 17, 2025, among the Issuer, Paramount Group Operating Partnership LP, Rithm Capital Corp. and certain Rithm subsidiaries.

Industry Context

This event highlights ongoing consolidation and strategic maneuvering within the real estate investment trust (REIT) sector, where companies like Paramount Group are either seeking or being targeted for acquisition to achieve scale, diversify portfolios, or enhance shareholder value. The rejection of an unsolicited bid in favor of a pre-existing merger agreement underscores the importance of strategic alignment and deal certainty in the current market.

Comparison to Industry Standards

• The Board's decision to reject Saray Capital's offer, citing an existing "Superior Proposal" definition within a merger agreement with Rithm Capital Corp., is a standard corporate governance practice to uphold fiduciary duties and contractual obligations.
• Similar situations have been observed in other REIT mergers, such as the proposed acquisition of Monmouth Real Estate Investment Corporation by Equity Commonwealth, where competing bids were evaluated against existing agreements.
• The 5.39% stake held by Saray Capital is a significant minority position, often a threshold for activist investors, comparable to stakes held by funds like Starboard Value or Elliott Management in other public companies when initiating strategic dialogues or acquisition attempts.

Corporate Governance

Stakeholder Impact

• Shareholders: The rejection of Saray Capital's offer means shareholders will likely proceed with the terms of the Rithm Capital Corp. merger, rather than a potential alternative offer from Saray Capital. This could be seen positively for deal certainty or negatively if Saray's offer was perceived as higher value.
• Saray Capital: As a significant shareholder, their offer was rejected, which may lead to further engagement or strategic decisions regarding their investment.
• Rithm Capital Corp.: The Board's decision reaffirms the existing merger agreement, providing confidence for Rithm Capital Corp. regarding the transaction's progression.

Next Steps

• Paramount Group is expected to proceed with its existing Agreement and Plan of Merger with Rithm Capital Corp.
• Saray Capital may consider further actions regarding its investment in Paramount Group, given its significant stake and the rejection of its offer.

Key Dates

Recommendation

The filing indicates that Paramount Group is already committed to a merger with Rithm Capital Corp., and the Board has rejected an unsolicited offer from Saray Capital. This suggests the company's valuation is likely tied to the terms of the Rithm merger. While Saray Capital's offer might have introduced a potential bidding war, its rejection means the current path is maintained. Investors should hold, awaiting the completion of the Rithm merger, as significant upside from a competing bid appears unlikely based on the Board's current stance.

Keywords

Paramount Group, Saray Capital, Schedule 13D/A, Merger Proposal, Shareholder Activism, Real Estate Investment Trust, Rithm Capital Corp, Acquisition Offer, Corporate Governance