SRAM and Lehman Brothers Merchant Banking (LBMB) have completed their transaction, giving LBMB a 40% stake in SRAM through a strategic investment.
“Getting to the finish line, given the current state of the financial markets, is a reflection of LBMBs 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 SRAMs management team to build the business and realize its full potential in the years to come,” said Charlie Moore, LBMB managing director.
The transaction brings a number of opportunities for SRAM and the cycling industry, including:
- SRAM adds LBMB as very capable strategic financial partner to its shareholder base.
- The SRAM Cycling Advocacy Fund has been established with $10 million. These funds will be used over the next five years to support efforts to improve cycling infrastructure.
- This process has cast the cycling industry in a positive light and introduced it to a number of capital providers.
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 alongside LBMB to further strengthen his ties with SRAM.
Armstrongs use of SRAM components will become a part of the SRAM overall marketing program. He will also serve as a technical advisor for SRAMs product development teams alongside many of SRAMs other established professional riders. Stan Day said “The entire organization welcomes Lance to the SRAM team. We are looking forward to his input and doing everything we can to support his return to racing”.
Headquartered in Chicago, SRAM markets its products under the SRAM, RockShox, Avid, Truvativ, and Zipp brand names. After more than 20 years of dedication to the bike industry, SRAM expects 2008 revenues to approach $500 million.