Early Monday, UK-based alternative asset manager GLG Partners revealed its plan to go public through a reverse acquisition transaction with New York-based Freedom Acquisition Holdings, Inc. (FRH). Based on Freedom's closing share price on June 22, 2007, the transaction values GLG at approximately $3.4 billion. Reverse acquisition is a way for a private company to become public. The company will use the acquisition as means of gaining a listing and will install its own management team and rename the acquired company. GLG also confirmed its agreements with Dubai-based Istithmar and Cologne-based Sal. Oppenheim, under which they are acquiring 3% ownership positions in GLG and investing into various GLG managed funds.
GLG, the eleventh largest alternative asset manager in the world, was initially founded in 1995 as a division of Lehman Brothers (LEH). In 2000, GLG was restructured as a separate legal entity. GLG currently manages over 40 funds, as well as managed accounts for high net worth individuals and institutions, using both alternative and long only strategies and products.
Freedom, founded in 2006, is in a development stage and does not have significant operations. The company intends to form a business combination through a merger, stock exchange, asset acquisition and reorganization. Freedom completed its initial public offering on December 28, 2006.
Under the terms of the deal, GLG owners will receive $1 billion in cash and 230 million shares of Freedom common stock from Freedom. GLG, which manages over $20 billion gross assets, said that the deal has been approved by the board of Freedom and is expected to complete early in the fourth quarter of this year.
Upon the completion of the transaction, the combined company will be named GLG Partners, Inc., with its shares listed on the New York Stock Exchange under the ticker symbol GLG'. GLG said it will also explore the merits of a dual listing in Europe.
Following the deal closure, Freedom's shareholders will own approximately 28% of the combined company, while current GLG equity holders will own about 72%. GLG also stated that its equity holders have committed to reinvest approximately 50% of their after-tax cash proceeds into GLG's funds at full fees.
GLG, the largest independent alternative investment manager in Europe, said that Noam Gottesman will become Chairman of the Board and Co-Chief Executive Officer of the combined company. Another Co-Chief Executive Officer will be Emmanuel Roman, currently Managing Director and Co- Chief Executive of GLG. The combined company's Board will include GLG's Gottesman and Roman, Freedom's President and Chief Executive and founder of Berggruen Holdings Nicolas Berggruen, Freedom's Chairman and Jarden Corp.'s Chairman and Chief Executive Martin Franklin, Freedom's director and former Chairman of Sunglass Hut International, Inc. James Hauslein, Freedom's director and President and Chief Executive officer of The Estee Lauder Companies, Inc. William Lauder, Land Securities Group plc's Chairman Paul Myners, Jarden Corp. Chief Financial Officer Ian Ashken and Perella Weinberg Partners' partner Peter Weinberg. GLG said that further appointments to the board will be made in due course. Pierre Lagrange, Gottesman and Roman will continue as Managing Directors of GLG.
According to GLG, Freedom will use proceeds from its initial public offering and will borrow up to $570 million from a committed third party lender to pay the cash portion of the purchase price. Additionally, Freedom and its subsidiaries will issue 230 million shares of common stock, on a fully diluted basis, valued at $2.4 billion, to the GLG equity holders.
While commenting on the deal, Gottesman said, This strategic transaction is an important step in building GLG's global business, affording us the opportunity to increase brand awareness and expand in major targeted markets, including the US, Middle East and Asia.
GLG said that Perella Weinberg Partners is the financial advisor for GLG, while Citi is providing financial advice to Freedom. Chadbourne & Parke LLP is acting as GLG's legal counsel, and Greenberg Traurig PA is providing legal counsel to Freedom.
Additionally, GLG today confirmed that Istithmar and Sal. Oppenheim signed agreements to acquire 3% ownership positions in GLG and to invest into various GLG managed funds. As per GLG, both Istithmar and Sal. Oppenheim have purchased their ownership interests from a former principal of GLG. These transactions are expected to close in July 2007.
While commenting on these strategic investments, Gottesman stated that Istithmar and Sal. Oppenheim will help GLG to support the further development and expansion of its business in the Middle East and Europe.
Istithmar was established in 2003 as an investment vehicle of the Government of Dubai in the United Arab Emirates. Istithmar has offices in Shanghai and New York. Sal. Oppenheim, founded in 1789, is a leading private bank in Europe, with approximately Euro 138 billion in assets under management.
FRH closed Friday's trade at $10.45, up $0.81, on a volume of 1.29 million shares.
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