Offer to Purchase for Cash by GAMCO Investors, Inc. Up to $50 Million But Not Less than $20 Million Aggregate Principal Amount of its Outstanding 0% Subordinated Debentures due 2015 (CUSIP No. 361438AA2) At a Purchase Price Not Greater Than $870 Nor Less Than $820 Per $1,000 Principal Amount THE TENDER OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON MONDAY, JUNE 18, 2012, UNLESS THE TENDER OFFER IS EXTENDED (SUCH TIME AND DATE, AS THE SAME MAY BE EXTENDED, THE EXPIRATION DATE ). GAMCO Investors, Inc., a New York corporation ( we, us, our, or the Company ), is offering to purchase for cash (the Offer ), upon the terms and subject to the conditions set forth in this Offer to Purchase (as it may be amended or supplemented from time to time, this Offer to Purchase ) and the accompanying Letter of Transmittal (the Letter of Transmittal ), up to $50 million aggregate principal amount of our outstanding 0% Subordinated Debentures due 2015 (the Debentures ), at a price determined by the Modified Dutch Auction procedure described below, from each registered owner of the Debentures (each, a Holder and, collectively, the Holders ). Under the Modified Dutch Auction procedure, we will determine the single price, not greater than $870 nor less than $820, net to the seller in cash, without interest, that we will pay per $1,000 principal amount for Debentures validly tendered and not properly withdrawn from the Offer, taking into account the total amount of Debentures tendered and the prices specified by tendering Holders (the Purchase Price ). We will select as the Purchase Price the lowest purchase price within the indicated range that will enable us to purchase $50 million aggregate principal amount of Debentures pursuant to the Offer, or such lesser principal amount of Debentures as are validly tendered and not properly withdrawn prior to the Expiration Date. All Debentures acquired in the Offer will be acquired at the same price, including those Debentures tendered at a price lower than the Purchase Price. Only Debentures validly tendered at prices at or below the Purchase Price, and not properly withdrawn prior to the Expiration Date, will be purchased. However, due to the proration and conditional tender provisions described in this Offer to Purchase, we may not purchase all of the Debentures tendered at or below the Purchase Price if more than $50 million aggregate principal amount of Debentures are tendered. Debentures not purchased in the Offer will be returned to the tendering Holders at our expense promptly after the Expiration Date. THE OFFER IS SUBJECT TO CERTAIN CONDITIONS, INCLUDING BUT NOT LIMITED TO A CONDITION THAT A MINIMUM OF $20 MILLION PRINCIPAL AMOUNT OF DEBENTURES ARE VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE. SEE SECTION 10, CONDITIONS OF THE OFFER. As of May 16, 2012, the $50 million aggregate principal amount of Debentures that we are offering to purchase pursuant to the Offer represents approximately 58% of the total outstanding principal amount of the Debentures.
A detailed discussion of the Offer is contained in this Offer to Purchase. Holders are strongly encouraged to read this entire package of materials and the publicly filed information about the Company referenced herein before making a decision regarding the Offer. EACH OF OUR BOARD OF DIRECTORS AND A SPECIAL COMMITTEE CONSISTING ENTIRELY OF INDEPENDENT MEMBERS OF OUR BOARD OF DIRECTORS UNANIMOUSLY APPROVED THE OFFER AND THE TERMS AND CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE, THE LETTER OF TRANSMITTAL AND RELATED DOCUMENTS. HOWEVER, NONE OF THE COMPANY, ANY OF OUR DIRECTORS, OFFICERS OR EMPLOYEES, THE INFORMATION AGENT OR THE DEPOSITARY MAKES ANY RECOMMENDATION AS TO WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR DEBENTURES OR AS TO THE PRICE OR PRICES AT WHICH YOU MAY CHOOSE TO TENDER YOUR DEBENTURES. YOU MUST MAKE YOUR OWN DECISION AS TO WHETHER TO TENDER YOUR DEBENTURES AND, IF SO, THE AGGREGATE PRINCIPAL AMOUNT OF DEBENTURES TO TENDER AND THE PRICE OR PRICES AT WHICH YOUR DEBENTURES SHOULD BE TENDERED. OUR DIRECTORS AND EXECUTIVE OFFICERS, INCLUDING OUR CHAIRMAN, CHIEF EXECUTIVE OFFICER, AND CHIEF INVESTMENT OFFICER - VALUE PORTFOLIOS, MARIO J. GABELLI, HAVE NOT INDICATED TO US WHETHER THEY INTEND TO TENDER THEIR DEBENTURES IN THE OFFER. Neither the Securities and Exchange Commission ( SEC ) nor any state securities commission has approved or disapproved of this transaction or passed upon the merits or fairness of such transaction or passed upon the adequacy or accuracy of the information contained in this Offer to Purchase. Any representation to the contrary is a criminal offense. Any questions or requests for assistance or for additional copies of this Offer to Purchase, the accompanying Letter of Transmittal or related documents may be directed to Morrow & Co., LLC, the information agent for the Offer (the Information Agent ), at its telephone numbers and address set forth below. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. The Information Agent for the Offer is: May 21, 2012 470 West Avenue Stamford, CT 06902 Debenture holders please call: (877) 815-6525 Banks and Brokers please call: (203) 658-9400 Email: GAMCO.info@morrowco.com ii
IMPORTANT INFORMATION Any Holder desiring to tender Debentures in the Offer must (i) in the case of a beneficial owner whose Debentures are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, contact the nominee and request that such nominee tender your Debentures, (ii) in the case of a Holder whose Debentures are held in book-entry form, follow the procedures set forth in Section 6, Procedures for Tendering Debentures, or (iii) in the case of a Holder who holds physical certificates evidencing such Debentures, complete and sign the accompanying Letter of Transmittal in accordance with the instructions set forth therein, have the signature thereon guaranteed (if required by Instruction 1 of the Letter of Transmittal), and deliver the properly completed and duly executed Letter of Transmittal, together with the certificates evidencing the Debentures and any other required documents, to Computershare Trust Company, N.A., the depositary for the Offer (the Depositary ). Only registered Holders of Debentures are entitled to tender such Debentures. A beneficial owner whose Debentures are registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee if such beneficial owner desires to tender Debentures so registered. See Section 6, Procedures for Tendering Debentures. All tenders of Debentures must be made before the Offer expires at 12:00 Midnight, Eastern Time, on Monday, June 18, 2012, unless the Offer is extended. A Holder who desires to tender Debentures and whose certificates for such Debentures are not immediately available or who cannot comply in a timely manner with the procedure for book-entry transfer described herein, or who cannot deliver all required documents to the Depositary prior to the expiration of the Offer, may tender such Debentures by following the procedure for guaranteed delivery set forth in Section 6, Procedures for Tendering Debentures. The Depositary and The Depository Trust Company ( DTC ) have confirmed that the Offer is eligible for DTC s Automated Tender Offer Program ( ATOP ). Accordingly, DTC participants may electronically transmit their acceptance of the Offer by causing DTC to transfer their Debentures to the Depositary in accordance with DTC s ATOP procedures for such a transfer. DTC will then send an Agent s Message (as defined herein) to the Depositary. Holders desiring to tender their Debentures on or prior to the Expiration Date should note that such Holders must allow sufficient time for completion of the ATOP procedures during normal business hours of DTC on such date. See Section 6, Procedures for Tendering Debentures. Tendering Holders who hold Debentures registered in their own names and who tender their Debentures directly to the Depositary will not be obligated to pay brokerage fees or commissions, the fees and expenses of the Information Agent or the Depositary or, subject to Instruction 10 of the Letter of Transmittal, transfer taxes on the purchases of Debentures in the Offer. If you hold your Debentures through a broker, dealer, commercial bank, trust company or other nominee, we urge you to consult such nominee to determine whether any transaction costs are applicable. The Company will pay all fees and expenses of the Depositary and the Information Agent in connection with the Offer. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF AS TO WHETHER YOU SHOULD TENDER OR NOT TENDER YOUR DEBENTURES IN THE OFFER. WE HAVE NOT AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS DOCUMENT OR IN THE LETTER OF TRANSMITTAL. ANY RECOMMENDATION OR ANY SUCH INFORMATION OR REPRESENTATION MADE BY iii
ANYONE ELSE MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE DEPOSITARY OR THE INFORMATION AGENT. We are not making the Offer to, and will not accept any tendered Debentures from, Holders in any jurisdiction where it would be illegal to do so. However, we may, at our discretion, take any actions necessary for us to make the Offer to Holders in any such jurisdiction. The delivery of this Offer to Purchase shall not under any circumstances create any implication that the information contained herein, or incorporated herein by reference, is correct as of any time subsequent to the date hereof or, in the case of information incorporated herein by reference, subsequent to the date thereof, or that there has been no change in the information set forth herein, or incorporated herein by reference, or in the affairs of the Company or any subsidiaries of the Company since the date hereof. This Offer to Purchase and the Letter of Transmittal contain important information which should be read carefully and in its entirety before any decision is made with respect to the Offer. You may contact the Information Agent or your broker, bank or other nominee for assistance in connection with this Offer or to request additional copies of the Offer documents. The contact information for the Information Agent is set forth on the back cover of this Offer to Purchase. iv
Table of Contents SUMMARY TERM SHEET... 1 FORWARD-LOOKING STATEMENTS... 6 THE OFFER... 7 1. Purpose of the Offer; Certain Information About the Company.... 7 2. Description of the Debentures.... 8 3. Terms of the Offer.... 9 4. Amendment; Extension; Waiver; Termination... 11 5. Certain Significant Considerations.... 12 6. Procedures for Tendering Debentures... 13 7. Withdrawal of Tendered Debentures.... 18 8. Acceptance of Debentures for Payment... 19 9. Source and Amount of Funds... 20 10. Conditions of the Offer.... 21 11. Certain U.S. Federal Income Tax Considerations.... 22 12. Interests of Directors and Executive Officers; Transaction and Arrangements Concerning the Debentures... 25 13. Trading Market for the Debentures.... 27 14. The Depositary and Information Agent.... 27 15. Solicitation.... 27 16. Fees and Expenses.... 28 17. Additional Information; Miscellaneous.... 28 Page v
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SUMMARY TERM SHEET We are providing this summary term sheet for your convenience. It highlights certain material terms of the proposed Offer, but you should realize that it does not describe all of the details of the Offer to the same extent described in the body of this Offer to Purchase. The following summary is qualified in its entirety by the more detailed information appearing elsewhere or incorporated by reference in this Offer to Purchase and the Letter of Transmittal. We urge you to read the entire Offer to Purchase and the Letter of Transmittal because they contain the full details of the Offer. Who is offering to purchase my Debentures? GAMCO Investors, Inc., the issuer of the Debentures, is offering to purchase the Debentures. For information about the Company, see Section 1, Purpose of the Offer; Certain Information About the Company. What is the Company offering to purchase? We are offering to purchase up to $50 million aggregate principal amount of the Company s outstanding 0% Subordinated Debentures due 2015, which were issued as part of a special dividend on our Class A Common Stock and Class B Common Stock to shareholders of record on December 15, 2010 pursuant to that certain indenture, dated as of December 31, 2010 (the Indenture ), between the Company and Computershare Trust Company, N.A., as Trustee (the Trustee ). See Section 2, Description of the Debentures. What principal amount of Debentures is being purchased? We are offering to purchase for cash from all Holders up to $50 million aggregate principal amount of Debentures (representing approximately 58% of the total outstanding principal amount of the Debentures as of May 16, 2012), or such lesser amount of Debentures as are validly tendered and not properly withdrawn prior to the Expiration Date. See Section 3, Terms of the Offer. Subject to certain limitations and legal requirements, we reserve the right to accept for payment, according to the terms and conditions of the Offer, up to an additional amount of Debentures not to exceed 2% of the aggregate principal amount outstanding (approximately $1.7 million aggregate principal amount as of May 16, 2012) without amending or extending the Offer. In exercising this right, we may increase the Purchase Price to allow us to purchase all such additional Debentures. See Section 3, Terms of the Offer. The Offer is conditioned on a minimum of $20 million principal amount of Debentures being validly tendered and not properly withdrawn prior to the Expiration Date (the Minimum Tender Condition ), and is subject to certain other conditions described below. See Section 10, Conditions of the Offer. Why is the Company offering to purchase the Debentures? We are making the Offer in order to reduce the principal amount of our outstanding indebtedness and to return cash to the Holders who elect to tender their Debentures at an earlier time than such Holders would receive cash upon the maturity of the Debentures on December 31, 2015. We will deliver the Debentures that we repurchase in the Offer to the Trustee for cancellation and those Debentures will cease to be outstanding. See Section 1, Purpose of the Offer; Certain Information About the Company. 1
What price will you receive for your Debentures if you tender them to us? We are conducting the Offer through a procedure commonly called a Modified Dutch Auction. This procedure allows you to select the price (in multiples of $5 per $1,000 principal amount) within a price range specified by us at which you are willing to sell your Debentures. If any specified tender price is not submitted in a whole multiple of $5, such price will be rounded down to the nearest whole multiple of $5. The price range for the Offer is a price not greater than $870 nor less than $820. We will determine the Purchase Price that we will pay per $1,000 principal amount, net to the seller in cash, without interest, promptly after the Expiration Date. We will select as the Purchase Price the lowest purchase price within the indicated range that will enable us to purchase $50 million aggregate principal amount of Debentures pursuant to the Offer, or such lesser principal amount of Debentures as are validly tendered and not properly withdrawn prior to the Expiration Date. All Debentures acquired in the Offer will be acquired at the same price, including those Debentures tendered at a price lower than the Purchase Price. See Section 3, Terms of the Offer. How do I set my purchase price? In order to select the price at which you wish to sell your Debentures, you must indicate the price within the specified range (in multiples of $5 per $1,000 principal amount) at which you wish to tender your Debentures in the section of the Letter of Transmittal captioned Description of Debentures Tendered Price at Which Debentures Are Being Tendered. If any specified tender price is not submitted in a whole multiple of $5, such price will be rounded down to the nearest whole multiple of $5. Alternatively, if you wish to maximize the chance that we will purchase your Debentures, you should refrain from specifying a price at which you are tendering your Debentures, in which case, you will accept the Purchase Price selected by us in the Offer. If you agree to accept the Purchase Price determined in the Offer, your Debentures will be deemed to be tendered at the minimum price of $820 per $1,000 principal amount. You should understand that this election could have the effect of lowering the Purchase Price paid for Debentures in the Offer and could result in your Debentures being purchased at the minimum price of $820 per $1,000 principal amount. See Section 6, Procedures for Tendering Debentures. What if less than $50 million aggregate principal amount of Debentures are tendered? Subject to the Minimum Tender Condition and the other conditions of the Offer described herein, if less than $50 million aggregate principal amount of Debentures are validly tendered, all Debentures tendered will be accepted and we will select as the Purchase Price the highest price specified by the tendering Holders, which will be paid to all tendering Holders, net to the seller in cash, without interest, upon the terms and subject to the conditions of the Offer. See Section 3, Terms of the Offer, Section 8, Acceptance of Debentures for Payment and Section 10, Conditions of the Offer. What if more than $50 million aggregate principal amount of Debentures are tendered? If more than $50 million aggregate principal amount of Debentures are validly tendered at or below the Purchase Price, upon the terms and subject to the conditions of the Offer, we will accept the tender of and pay the Purchase Price, net to the seller in cash, without interest, for: (i) the Debentures tendered at or below the Purchase Price (except for those Debentures tendered conditionally if the condition was not satisfied), on a pro rata basis, and (ii) only if necessary to enable us to purchase $50 million aggregate principal amount of Debentures, the Debentures tendered at or below the Purchase Price (for which the condition requiring us to purchase a specified number of Debentures was not initially satisfied), to the extent feasible, selected for purchase by random lot. To be eligible for purchase by random lot, Holders whose Debentures are conditionally tendered must have tendered the entire 2
outstanding principal amount of such Debentures. In all cases, the Company will make appropriate adjustments to avoid purchases of Debentures in a principal amount other than an integral multiple of $1,000. See Section 3, Terms of the Offer and Section 8, Acceptance of Debentures for Payment. When does the Offer expire? The Offer expires at 12:00 Midnight, Eastern Time, on Monday, June 18, 2012, unless the Offer is extended. We may choose to extend the Offer for any reason, subject to applicable laws. If a broker, dealer, commercial bank, trust company or other nominee holds your Debentures, it is possible the nominee has established an earlier deadline for you to act to instruct the nominee to accept the Offer on your behalf. We urge you to contact the broker, dealer, commercial bank, trust company or other nominee to find out their deadline. See Section 3, Terms of the Offer. Can the Offer be extended, amended or terminated, and if so, under what circumstances? Yes, we can extend or amend the Offer in our sole discretion. If we extend the Offer, we will delay the acceptance of any Debentures that have been tendered. If we decide to extend the Offer, we will issue a press release announcing the extension and the new expiration date by 9:00 a.m., Eastern Time, on the first business day following the previously scheduled Expiration Date. We can terminate the Offer under certain circumstances, including if the Minimum Tender Condition is not met. See Section 4, Amendment; Extension; Waiver; Termination and Section 10, Conditions of the Offer. When will the Company pay for the Debentures tendered? Payment for the Debentures will be made promptly following the Expiration Date and the acceptance of the Debentures for payment, provided, however, if proration is required we do not expect to announce the final results of such proration until up to approximately four business days after the Expiration Date and to begin paying for tendered Debentures promptly thereafter. See Section 8, Acceptance of Debentures for Payment. How will we fund the purchase of the Debentures in the Offer? We anticipate that we will use cash on hand to pay for the Debentures purchased in the Offer and to pay related fees and expenses. See Section 9, Source and Amount of Funds. Are there any conditions of the Offer? The Offer is not conditioned on our receipt of financing. However, the Offer is conditioned on a minimum of $20 million principal amount of Debentures being validly tendered and not properly withdrawn prior to the Expiration Date (referred to as the Minimum Tender Condition). Additionally, the Offer is subject to customary conditions, such as the absence of court and governmental action prohibiting, challenging or restricting the Offer and the absence of changes in general market conditions or our business that, in our reasonable judgment, are or may be materially adverse to us, as well as other conditions. See Section 10, Conditions of the Offer. How do I tender my Debentures? There are three ways to tender your Debentures, depending upon the manner in which your Debentures are held: 3
if your Debentures are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, contact the nominee and request that such nominee effect the tender of those Debentures that you wish to tender in the Offer; in the case of a Holder whose Debentures are held in book-entry form, follow the procedures set forth in Section 6, Procedures for Tendering Debentures ; or if you hold physical certificates evidencing Debentures, you must complete and sign the enclosed Letter of Transmittal in accordance with the instructions set forth therein, have the signature thereon guaranteed (if required by Instruction 1 of the Letter of Transmittal), and deliver the properly completed and duly executed Letter of Transmittal, together with the certificates evidencing the Debentures being tendered and any other required documents, to the Depositary. A Holder who desires to tender Debentures and whose certificates for such Debentures are not immediately available or who cannot comply in a timely manner with the procedure for book-entry transfer described herein, or who cannot deliver all required documents to the Depositary prior to the expiration of the Offer, may tender such Debentures by following the procedure for guaranteed delivery set forth in Section 6, Procedures for Tendering Debentures. You should read Section 6, Procedures for Tendering Debentures, for more information on how to tender your Debentures. If I change my mind, can I withdraw my tender of Debentures? You may withdraw your tendered Debentures at any time on or before the Expiration Date (as it may be extended from time to time). To withdraw your tender, please follow the instructions under Section 7, Withdrawal of Tendered Debentures. No consideration will be payable in respect of Debentures so withdrawn. What happens if I do not tender my Debentures? Debentures not tendered and purchased in the Offer will remain outstanding. Any Debentures that remain outstanding after the completion of the Offer will continue to be our obligations. The terms and conditions governing the Debentures, including the covenants and other protective provisions contained in the Indenture governing the Debentures, will remain unchanged. No amendment to the Indenture is being sought. The Debentures are not listed on any national or regional securities exchange or quoted on any automated quotation system. To our knowledge, the Debentures are traded infrequently in transactions arranged through brokers, and reliable market quotations for the Debentures are not available. To the extent that Debentures are tendered and accepted for purchase pursuant to the Offer, the trading market for Debentures that remain outstanding is likely to be even more limited. From time to time after the tenth business day following the Expiration Date or other date of termination of the Offer, the Company or its affiliates may acquire any Debentures that are not tendered pursuant to the Offer through open market purchases, privately negotiated transactions, tender offers, exchange offers, redemptions or otherwise, upon such terms and at such prices as the Company may determine, which may be more or less than the price to be paid pursuant to the Offer and could be for cash or other consideration. There can be no assurance as to which, if any, of these alternatives (or combinations thereof) the Company or its affiliates will choose to pursue in the future. 4
For information regarding additional matters you should consider before deciding whether to tender Debentures in the Offer, see Section 5, Certain Significant Considerations. Will the Company s directors and executive officers participate in the Offer? Our directors and executive officers, including our Chairman, Chief Executive Officer, and Chief Investment Officer - Value Portfolios, Mario J. Gabelli ( Mr. Gabelli ), have not indicated to us whether they intend to tender their Debentures in the Offer. As of May 16, 2012, Mr. Gabelli beneficially owned $45,772,300 principal amount of Debentures, and our other directors and executive officers beneficially owned, in the aggregate, an additional $1,599,700 principal amount of Debentures. See Section 12, Interests of Directors and Executive Officers; Transaction and Arrangements Concerning the Debentures. Has the Board of Directors approved the Offer? Each of our Board of Directors and a special committee consisting entirely of independent members of our Board of Directors unanimously approved the Offer and the terms and conditions set forth in this Offer to Purchase, the Letter of Transmittal and related documents. However, none of the Company, any of our directors, officers or employees, the Information Agent or the Depositary makes any recommendation to you as to whether you should tender or refrain from tendering your Debentures or as to the purchase price or prices at which you may choose to tender your Debentures. See Section 1, Purpose of the Offer; Certain Information About the Company. Will I have to pay brokerage commissions if I tender my Debentures? If you are a registered stockholder and you tender your Debentures directly to the Depositary, you will not incur any brokerage commissions. If you hold Debentures through a broker, dealer, commercial bank, trust company or other nominee, we recommend that you consult your broker, dealer, commercial bank, trust company or other nominee to determine whether transaction costs are applicable. See Section 16, Fees and Expenses. Are there U.S. federal income tax implications if I tender my Debentures? The receipt of cash for Debentures pursuant to the Offer will generally be a taxable transaction for U.S. federal income tax purposes. You are urged to consult your own tax advisors as to the specific tax consequences to you of the Offer. See Section 11, Certain U.S. Federal Income Tax Considerations. Who can respond to questions or provide assistance regarding the Offer? Please direct questions or requests for assistance, or for additional copies of this Offer to Purchase, the Letter of Transmittal or other materials to the Information Agent at its telephone numbers and address set forth on the back cover page of this Offer to Purchase. See Section 14, The Depositary and Information Agent. 5
FORWARD-LOOKING STATEMENTS This Offer to Purchase and the documents incorporated herein by reference contain forwardlooking statements that are based on current expectations, estimates, beliefs, assumptions and projections about our business. Words such as expects, anticipates, intends, targets, plans, believes, seeks, estimates, may, will, should and variations of such words, and similar expressions, are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors. Such factors include, but are not limited to, a decline in the securities markets, a decline in the performance of our products, a general downturn in the economy, changes in government policy or regulation, changes in our ability to attract or retain key employees, and unforeseen costs and other effects related to legal proceedings or investigations of governmental and self-regulatory organizations. Please refer to the section entitled Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, as well as any of our other filings with the SEC, for further information on these and other risk factors affecting the Company. These forward-looking statements speak only as of the date on which they are made, and, except as required by law, we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this Offer to Purchase. If we do update or modify one or more forward-looking statements, you should not conclude that we will make additional updates or modifications with respect thereto or with respect to other forward-looking statements, except as required by law. 6
THE OFFER 1. Purpose of the Offer; Certain Information About the Company. Purpose of the Offer We are making the Offer in order to reduce the principal amount of our outstanding indebtedness and to return cash to Holders who elect to tender their Debentures at an earlier time than such Holders would receive cash upon the maturity of the Debentures on December 31, 2015. We will deliver the Debentures that we purchase in the Offer to the Trustee for cancellation and those Debentures will cease to be outstanding. Any Debentures that remain outstanding after the completion of the Offer will continue to be our obligations. The terms and conditions governing the Debentures, including the covenants and other protective provisions contained in the Indenture governing the Debentures, will remain unchanged. We are not seeking the approval of Holders for any amendment to the terms of the Debentures or Indenture. Certain Information About the Company GAMCO Investors, Inc. (NYSE: GBL), a company incorporated under the laws of New York, well known for its Private Market Value with a Catalyst TM investment approach, is a widely-recognized provider of investment advisory services to mutual funds, institutional and high net worth investors, and investment partnerships, principally in the United States. Through Gabelli & Company, Inc. ( Gabelli & Company ), we provide institutional research and brokerage services to institutional clients and investment partnerships. Through Gabelli & Company, until July 31, 2011, and through G.distributors, LLC ( G.distributors ) effective August 1, 2011, we provide mutual fund distribution. We generally manage assets on a fully discretionary basis and invest in a variety of U.S. and international securities through various investment styles. Our revenues are based primarily on the Company s levels of assets under management ( AUM ) and fees associated with our various investment products. Since 1977, we have been identified with and have enhanced the value style approach to investing. Our investment objective is to earn a superior risk-adjusted return for our clients over the longterm through our proprietary fundamental research. In addition to our value portfolios, we offer our clients a broad array of investment strategies that include global, growth, international and convertible products. We also offer a series of investment partnership (performance fee-based) vehicles that provide a series of long-short investment opportunities in market and sector specific opportunities, including offerings of non-market correlated investments in merger arbitrage, as well as fixed income strategies. We conduct our investment advisory business principally through: GAMCO Asset Management Inc. (Institutional and Private Wealth Management), Gabelli Funds, LLC (Mutual Funds) and Gabelli Securities, Inc. (Investment Partnerships). We also act as an underwriter and provide institutional research through Gabelli & Company, our broker-dealer subsidiary. As of March 31, 2012, we had approximately $36.7 billion of AUM. We are a holding company formed in connection with our initial public offering in February 1999. GGCP Holdings, LLC, a subsidiary of GGCP, Inc. owns a majority of our outstanding shares of Class B Common Stock. Such ownership represented approximately 94.7% of the combined voting power of the outstanding common stock and approximately 73.6% of the equity interest on May 16, 2012. GGCP, Inc. is majority-owned by Mr. Gabelli, our Chief Executive Officer and Chairman of the Board. Accordingly, Mr. Gabelli is deemed to control the Company. 7
Our principal executive offices are located at One Corporate Center, Rye, NY 10580-1422. Our telephone number is (914) 921-5000. Additional information about our business can be found in our periodic filings with the SEC, including our annual report on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K. See Section 17, Additional Information; Miscellaneous. Board of Directors Approval On May 16, 2012, each of our Board of Directors and a special committee consisting entirely of independent members of our Board of Directors unanimously approved the Offer and the terms and conditions set forth in this Offer to Purchase, the Letter of Transmittal and related documents. However, none of the Company, any of our directors, officers or employees, the Information Agent or the Depositary makes any recommendation to you as to whether you should tender or refrain from tendering your Debentures or as to the purchase price or prices at which you may choose to tender your Debentures. You must make your own decision as to whether to tender your Debentures and, if so, the aggregate principal amount of Debentures to tender and the price or prices at which your Debentures should be tendered. In doing so, you should consult your own investment and tax advisors, and read carefully and evaluate the information in this Offer to Purchase and the Letter of Transmittal. 2. Description of the Debentures. The following description of the Debentures and any other descriptions of the Debentures contained in this Offer to Purchase are qualified in their entirety by reference to the Indenture, dated as of December 31, 2010, between the Company and Computershare Trust Company, N.A., as Trustee, filed as an exhibit to the Company s Current Report on Form 8-K filed with the SEC on January 6, 2011. The Debentures were issued pursuant to the Indenture. The terms of the Debentures are as stated in the Indenture and as made a part of the Indenture by reference to the Trust Indenture Act of 1939 (the Trust Indenture Act ). The Debentures are subject to all such terms and the Holders of the Debentures are referred to the Indenture and the Trust Indenture Act for a statement thereof. Copies of the Indenture are available from the Information Agent at its telephone numbers and address set forth on the back cover page of this Offer to Purchase. The Debentures were issued on December 31, 2010 in an original principal amount of $86.4 million, as part of a special dividend (the Special Dividend ) on our Class A Common Stock and Class B Common Stock to shareholders of record on December 15, 2010. The Special Dividend consisted of $0.80 in cash and $3.20 in principal amount of the Debentures. As of May 16, 2012, the face value of the Debentures outstanding was $86,114,564 and the fair value of the Debentures outstanding was approximately $65.7 million. The fair value of the Company s debt is estimated based on quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities or using market standard models. Inputs in these standard models include credit rating, maturity and interest rate. At the time of issuance on December 31, 2010, the effective interest rate for the Debentures was 7.45%. The Debentures do not bear interest and mature on December 31, 2015. The Debentures are subordinated to all of our senior indebtedness. The Debentures have a par value of $100 and are callable at the option of the Company, in whole or in part, at any time or from time to time at a redemption price equal to 100% of the principal amount of the Debentures to be redeemed. 8
Any Debentures that remain outstanding after the completion of the Offer will continue to be our obligations. The terms and conditions governing the Debentures, including the covenants and other protective provisions contained in the Indenture governing the Debentures, will remain unchanged. No amendment to the Indenture is being sought. 3. Terms of the Offer. Offer and Purchase Price Upon the terms and subject to the conditions set forth in this Offer to Purchase and the Letter of Transmittal, we are offering to purchase for cash up to $50 million aggregate principal amount of our outstanding Debentures at a price determined by the Modified Dutch Auction procedure described below, from each registered owner of the Debentures. Under the Modified Dutch Auction procedure, we will determine the single price, not greater than $870 nor less than $820, net to the seller in cash, without interest, that we will pay per $1,000 principal amount for Debentures validly tendered and not properly withdrawn from the Offer, taking into account the total amount of Debentures tendered and the prices specified by tendering Holders. We will select as the Purchase Price the lowest purchase price within the indicated range that will enable us to purchase $50 million aggregate principal amount of Debentures pursuant to the Offer, or such lesser principal amount of Debentures as are validly tendered and not properly withdrawn prior to the Expiration Date. The Offer is conditioned on a minimum of $20 million principal amount of Debentures being validly tendered and not properly withdrawn prior to the Expiration Date (referred to as the Minimum Tender Condition) and is subject to certain other conditions described herein. All Debentures acquired in the Offer will be acquired at the same price, including those Debentures tendered at a price lower than the Purchase Price. Only Debentures validly tendered at prices at or below the Purchase Price, and not properly withdrawn prior to the Expiration Date, will be purchased. However, due to the proration and conditional tender provisions described in this Offer to Purchase, we may not purchase all of the Debentures tendered at or below the Purchase Price if more than $50 million aggregate principal amount of Debentures are tendered. Any principal amount of Debentures tendered but not purchased pursuant to the Offer will be returned to the tendering Holders at our expense promptly following the earlier of the Expiration Date or the date on which the Offer is terminated. Any Debentures that remain outstanding after the completion of the Offer will continue to be our obligations. Subject to certain limitations and legal requirements, we reserve the right to accept for payment, according to the terms and conditions of the Offer, up to an additional amount of Debentures not to exceed 2% of the aggregate principal amount outstanding (approximately $1.7 million aggregate principal amount as of May 16, 2012) without amending or extending the Offer. In exercising this right, we may increase the Purchase Price to allow us to purchase all such additional Debentures. As of May 16, 2012, the $50 million aggregate principal amount of our Debentures that we are offering to purchase pursuant to the Offer represents approximately 58% of the total outstanding principal amount of the Debentures, which was $86,114,564 as of May 16, 2012. Proration If more than $50 million aggregate principal amount of Debentures are validly tendered at or below the Purchase Price, upon the terms and subject to the conditions of the Offer, we will accept the 9
tender of and pay the Purchase Price, net to the seller in cash, without interest, for: (i) the Debentures tendered at or below the Purchase Price (except for those Debentures tendered conditionally if the condition was not satisfied), on a pro rata basis, and (ii) only if necessary to enable us to purchase $50 million aggregate principal amount of Debentures, the Debentures tendered at or below the Purchase Price (for which the condition requiring us to purchase a specified number of Debentures was not initially satisfied), to the extent feasible, selected for purchase by random lot. To be eligible for purchase by random lot, Holders whose Debentures are conditionally tendered must have tendered the entire outstanding principal amount of such Debentures. In all cases, the Company will make appropriate adjustments to avoid purchases of Debentures in a principal amount other than an integral multiple of $1,000. Any principal amount of Debentures tendered but not purchased pursuant to the Offer, including Debentures tendered pursuant to the Offer at prices greater than the Purchase Price and Debentures not purchased because of proration or conditional tender provisions, will be returned to the tendering Holders at our expense promptly following the earlier of the Expiration Date or the date on which the Offer is terminated. Any Debentures that remain outstanding after the completion of the Offer will continue to be our obligations. In the event that proration of tendered Debentures is required, the Company or the Depositary will determine the final proration factor promptly after the Expiration Date. Subject to the conditional tender procedures described herein, proration for each Holder tendering Debentures will be based on the ratio of (x) the aggregate principal amount of Debentures validly tendered and not properly withdrawn prior to the Expiration Date by the Holder at or below the Purchase Price to (y) the aggregate principal amount of Debentures validly tendered and not properly withdrawn prior to the Expiration Date by all Holders at or below the Purchase Price. This ratio will be applied to Holders tendering Debentures to determine the principal amount of Debentures that will be purchased from each tendering Holder in the Offer. Although the Company does not expect to be able to announce the final results of such proration until up to approximately four business days after the Expiration Date and to begin paying for tendered Debentures promptly thereafter, the Company will announce preliminary results of proration by press release promptly after the Expiration Date. Holders may also obtain such preliminary proration information from the Information Agent. Exchange Act Rule 14e-1(c) requires that the Company pay the consideration offered or return the Debentures deposited pursuant to the Offer promptly after the termination of the Offer. Conditional Tenders In the event of an oversubscription of the Offer, Debentures validly tendered at or below the Purchase Price on or prior to the Expiration Date will be subject to proration. In order to avoid (in full or in part) possible proration, a Holder may tender Debentures subject to the condition that we must purchase a specified minimum principal amount of the Holder s Debentures tendered pursuant to a Letter of Transmittal if we purchase any amount of such Debentures. Any Holder desiring to make a conditional tender must so indicate in the section entitled Conditional Tenders in the Letter of Transmittal and indicate the minimum principal amount of the Holder s Debentures that we must purchase if we purchase any amount of such Debentures. You should consult your own investment and tax advisors with respect to such election. If more than $50 million aggregate principal amount of Debentures are validly tendered at or below the Purchase Price and not properly withdrawn prior to the Expiration Date, so that we must prorate our acceptance of and payment for the tendered Debentures, after the Expiration Date we will calculate a preliminary proration percentage with respect to such Debentures based upon all Debentures validly tendered, conditionally or unconditionally. If the effect of this preliminary proration would be to 10
reduce the principal amount of Debentures that we purchase from any Holder below the minimum principal amount specified by such Holder, the Debentures conditionally tendered will automatically be regarded as withdrawn (except as provided in the next paragraph). All Debentures tendered by a Holder subject to a conditional tender that are withdrawn as a result of proration will be returned to the tendering Holder at our expense. After giving effect to these withdrawals, we will accept the remaining Debentures validly tendered, conditionally or unconditionally, and not properly withdrawn prior to the Expiration Date. If conditional tenders that would otherwise be regarded as withdrawn would cause the aggregate principal amount of Debentures that we purchase to fall below $50 million (or such greater amount as we may elect to purchase, subject to applicable law) then, to the extent feasible, we will select enough of the Debentures conditionally tendered that would otherwise have been withdrawn to permit us to purchase $50 million aggregate principal amount of Debentures. In selecting among the conditional tenders, we will select by random lot, treating all tenders by a particular taxpayer as a single lot, and will limit our purchase in each case to the designated minimum principal amount of Debentures to be purchased. To be eligible for purchase by random lot, Holders whose Debentures are conditionally tendered must have tendered the entire outstanding principal amount of such Debentures. Conditions The Offer is not conditioned on our receipt of financing. However, the Company s obligation to accept for payment, and to pay for, Debentures validly tendered pursuant to the Offer is conditioned upon the satisfaction, prior to the Expiration Date, of the Minimum Tender Condition and the other conditions set forth in Section 10, Conditions of the Offer. If by the Expiration Date any or all of such conditions have not been satisfied, the Company expressly reserves the right, in its sole discretion, but subject to applicable law, to (i) waive any and all of the conditions of the Offer, other than those dependent upon the receipt of necessary government approvals, prior to the Expiration Date, (ii) extend the Expiration Date, (iii) amend the terms of the Offer and/or (iv) terminate the Offer and not accept for payment any Debentures tendered in the Offer. Any extension, amendment or termination will be followed as promptly as practicable by a public announcement thereof, such announcement in the case of an extension to be issued no later than 9:00 a.m., Eastern Time, on the first business day following the previously scheduled Expiration Date. Expiration of the Offer The Offer expires at 12:00 Midnight, Eastern Time, on Monday, June 18, 2012, unless the Offer is extended by the Company. We may choose to extend the Offer for any reason, subject to applicable laws. If we decide to extend the Offer, we will issue a press release announcing the extension and the new expiration date by 9:00 a.m., Eastern Time, on the first business day following the previously scheduled Expiration Date. If a broker, dealer, commercial bank, trust company or other nominee holds your Debentures, it is possible the nominee has established an earlier deadline for you to act to instruct the nominee to accept the Offer on your behalf. We urge you to contact the broker, dealer, commercial bank, trust company or other nominee to find out their deadline. 4. Amendment; Extension; Waiver; Termination. We expressly reserve the right, in our sole discretion at any time or from time to time, subject to applicable law: 11
to extend the Expiration Date and thereby delay acceptance for payment of, and the payment for, any Debentures, by giving written notice of such extension to the Depositary and making a public announcement of the extension; to amend the Offer in any respect, by giving written notice of such amendment to the Depositary and making a public announcement of the amendment; or to waive in whole or in part any condition to the Offer and accept for payment and purchase any Debentures validly tendered and not validly withdrawn on or before the Expiration Date. If the Minimum Tender Condition or any of the other conditions set forth in Section 10, Conditions of the Offer have failed to be satisfied, we reserve the right, in our sole discretion, to (i) terminate the Offer and not accept for payment and not pay for any Debentures tendered that we have not already accepted for payment and paid for and (ii) subject to applicable law, postpone payment for any tendered Debentures. If we elect to terminate the Offer or postpone payment for tendered Debentures, we will give written notice to the Depositary and make a public announcement of such termination or postponement. Our reservation of the right to delay payment for Debentures that we have accepted for payment is limited by Section 13e-4(f)(5), which requires that we pay the consideration offered or return the Debentures tendered promptly after the termination of the Offer. If we materially change the terms of the Offer or the information concerning the Offer, or if we waive a material condition to the Offer, we will disseminate additional information and extend the Offer to the extent required by Exchange Act Rules 13e-4(d)(2) and 13e-4(e)(3). In addition, we may, if we deem appropriate, extend the Offer for any other reason. If we purchase an additional amount of Debentures not exceeding 2% of the outstanding principal amount of our Debentures (approximately $1.7 million principal amount as of May 16, 2012), pursuant to Exchange Act Rule 13e-4(f)(1)(ii), this will not be deemed a material change to the terms of the Offer, and we will not be required to amend or extend the Offer. In addition, if the consideration to be paid in the Offer is increased or decreased or the principal amount of Debentures subject to the Offer is increased or decreased, the Offer will remain open at least 10 business days from the date we first give notice of such increase or decrease to Holders of Debentures subject to the Offer, by press release or otherwise. We will notify you as promptly as practicable of any other extension, waiver, amendment or termination by press release or other public announcement, with the announcement in the case of an extension to be issued no later than 9:00 a.m., Eastern Time, on the first business day following the previously scheduled Expiration Date. Without limiting the manner in which we may choose to make any public announcement, we will have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a press release. If we terminate the Offer, we will give immediate notice of the termination to the Depositary, and all Debentures previously tendered will be returned promptly to the tendering Holders thereof. If the Offer is withdrawn or otherwise not completed, the Purchase Price will not be paid or become payable to Holders of Debentures who have validly tendered their Debentures in the Offer. 5. Certain Significant Considerations. The following considerations, in addition to other information described elsewhere herein or incorporated by reference herein, should be carefully considered by each Holder before deciding whether to tender Debentures in the Offer. 12