3cb
09-25-2008, 02:56 PM
Here's one unexpected fan cheering Lance Armstrong's return to professional cycling: Lehman Brothers Holdings Inc.
The collapsed investment bank recently agreed to make a large investment in a high-end bicycle-components maker. That manufacturer stands to benefit from Mr. Armstrong's plan, announced Wednesday, to join a Kazakhstan-based racing team next year.
Team Astana uses components made by a Chicago company called SRAM Corp. That is big news in the cycling world, given that Mr. Armstrong spent much of his career using gears, brakes and other components made by Shimano Inc. of Japan.
Agence France-Presse/Getty Images
Lance Armstrong, speaking Wednesday at the Clinton Global Initiative in New York, where he also announced that he is switching teams -- and bicycle components -- to the delight of Lehman Brothers.
It is a jolt of good news for Lehman, whose private-equity arm, Lehman Brothers Merchant Banking, struck a deal last month to buy 40% of the company for about $200 million. With its parent in Chapter 11 bankruptcy-court protection, the unit is scrambling to close the deal. Charlie Moore, a managing director of Lehman Brothers Merchant Banking, said he is confident it will close the first week of October.
Mr. Armstrong is investing several million dollars into SRAM, where he will serve as a technical adviser. He has agreed to use SRAM components when he races. A full set of top-of-the-line SRAM road-bike components retails for about $2,000.
The competition for a stake in SRAM had been hotly contested, with about 20 private-equity firms -- including Bear Stearns Merchant Banking, TA Associates Inc. and Carlyle Group LLC -- taking a close look at the company.
Lehman's private-equity team had a unique angle on the deal. The head of the unit, Charlie Ayers, had met Mr. Armstrong in the summer of 2007 at a Rolling Stones concert in Rome they were attending with a mutual friend. When Lehman started looking at SRAM, Mr. Ayers emailed Mr. Armstrong asking if he would be interested in helping Lehman take a look at the company.
As the sales process progressed, Lehman offered Mr. Armstrong an opportunity to co-invest. They also discussed ways to expand Mr. Armstrong's role, at which point Lehman introduced Mr. Armstrong to SRAM's co-founder and Chief Executive Stan Day.
Mr. Day said his choosing Lehman as a partner had little, if anything, to do with Mr. Armstrong. Mr. Day said he was initially wary of Mr. Armstrong's involvement, because the seven-time Tour de France winner had long used Shimano's components, and Mr. Day thought it would be awkward to have him as an investor. Shimano is more than twice the size of SRAM, which is expected to generate roughly $500 million in revenue this year.
But earlier this month, Mr. Armstrong surprised the cycling world -- and SRAM and Lehman Brothers -- when he announced that he will come out of retirement and return to competition.
"The funny thing, when we did the deal with Lance we were unaware that he was planning to return to competitive cycling," said Lehman's Mr. Moore. "It's serendipitous."
Now that Mr. Armstrong is returning to the sport and making the switch to SRAM components, Mr. Day is thrilled to have him on board. "You've got the former world's best coming back and switching components," said Mr. Day. "What a vote of confidence."
Whether Mr. Armstrong can return to his victorious ways is another issue. At a news conference Wednesday, Mr. Armstrong was circumspect about his prospects. "Honestly, I don't know. I've been off the bike three years," said the 37-year-old Mr. Armstrong. " I have a fair bit of confidence, but I don't have that kind of confidence, yet."
The collapsed investment bank recently agreed to make a large investment in a high-end bicycle-components maker. That manufacturer stands to benefit from Mr. Armstrong's plan, announced Wednesday, to join a Kazakhstan-based racing team next year.
Team Astana uses components made by a Chicago company called SRAM Corp. That is big news in the cycling world, given that Mr. Armstrong spent much of his career using gears, brakes and other components made by Shimano Inc. of Japan.
Agence France-Presse/Getty Images
Lance Armstrong, speaking Wednesday at the Clinton Global Initiative in New York, where he also announced that he is switching teams -- and bicycle components -- to the delight of Lehman Brothers.
It is a jolt of good news for Lehman, whose private-equity arm, Lehman Brothers Merchant Banking, struck a deal last month to buy 40% of the company for about $200 million. With its parent in Chapter 11 bankruptcy-court protection, the unit is scrambling to close the deal. Charlie Moore, a managing director of Lehman Brothers Merchant Banking, said he is confident it will close the first week of October.
Mr. Armstrong is investing several million dollars into SRAM, where he will serve as a technical adviser. He has agreed to use SRAM components when he races. A full set of top-of-the-line SRAM road-bike components retails for about $2,000.
The competition for a stake in SRAM had been hotly contested, with about 20 private-equity firms -- including Bear Stearns Merchant Banking, TA Associates Inc. and Carlyle Group LLC -- taking a close look at the company.
Lehman's private-equity team had a unique angle on the deal. The head of the unit, Charlie Ayers, had met Mr. Armstrong in the summer of 2007 at a Rolling Stones concert in Rome they were attending with a mutual friend. When Lehman started looking at SRAM, Mr. Ayers emailed Mr. Armstrong asking if he would be interested in helping Lehman take a look at the company.
As the sales process progressed, Lehman offered Mr. Armstrong an opportunity to co-invest. They also discussed ways to expand Mr. Armstrong's role, at which point Lehman introduced Mr. Armstrong to SRAM's co-founder and Chief Executive Stan Day.
Mr. Day said his choosing Lehman as a partner had little, if anything, to do with Mr. Armstrong. Mr. Day said he was initially wary of Mr. Armstrong's involvement, because the seven-time Tour de France winner had long used Shimano's components, and Mr. Day thought it would be awkward to have him as an investor. Shimano is more than twice the size of SRAM, which is expected to generate roughly $500 million in revenue this year.
But earlier this month, Mr. Armstrong surprised the cycling world -- and SRAM and Lehman Brothers -- when he announced that he will come out of retirement and return to competition.
"The funny thing, when we did the deal with Lance we were unaware that he was planning to return to competitive cycling," said Lehman's Mr. Moore. "It's serendipitous."
Now that Mr. Armstrong is returning to the sport and making the switch to SRAM components, Mr. Day is thrilled to have him on board. "You've got the former world's best coming back and switching components," said Mr. Day. "What a vote of confidence."
Whether Mr. Armstrong can return to his victorious ways is another issue. At a news conference Wednesday, Mr. Armstrong was circumspect about his prospects. "Honestly, I don't know. I've been off the bike three years," said the 37-year-old Mr. Armstrong. " I have a fair bit of confidence, but I don't have that kind of confidence, yet."