CHICAGO, IL (BRAIN)—SRAM and Lehman Brothers Merchant Banking have finalized their equity partnership deal, giving LBMB a 40 percent stake in SRAM.
The $200 million deal was completed on Sept. 30 even with Lehman Brothers Holdings—an affiliate subsidiary of LBMB—filing for Chapter 11 bankruptcy in mid-September.
“Getting to the finish line, given the current state of the financial markets, is a reflection of LBMB’s role as one of the leading private equity organizations in the middle market and our strong SRAM management team,” said Stan Day, chief executive of SRAM.
“All of us at LBMB are thrilled to be closing our investment in SRAM. The company is a leader in its industry with tremendous momentum and a bright future. We look forward to working with SRAM’s management team to build the business and realize its full potential in the years to come,” said Charlie Moore, LBMB managing director.
As a result of the transaction, the Chicago-based components company will establish the SRAM Cycling Advocacy Fund with $10 million. These funds will be used over the next five years to support efforts to improve cycling infrastructure.
Also as a result of the transaction, Moore and Bill Lovejoy, also a managing director at LBMB, will join the SRAM Board of Directors. The SRAM management team remains intact.
Prior to the completion of the transaction, seven-time Tour de France winner Lance Armstrong confirmed his return to the sport of bike racing with the SRAM-supported Team Astana. Additionally, Armstrong has made a meaningful passive investment through LBMB to further strengthen his ties with SRAM. According to the Wall Street Journal, Armstrong is said to be investing "several million" dollars into SRAM.
Armstrong’s use of SRAM components will become a part of the SRAM overall marketing program. He will also serve as a technical advisor for SRAM’s product development teams alongside many of SRAM’s other established professional riders.
“The entire organization welcomes Lance to the SRAM team," Day said. "We are looking forward to his input and doing everything we can to support his return to racing."