SPAC Sails Into M&A Waters
Former Apollo pro's acquisition vehicle nets majority stake in shipping company.
March 24, 2008
Marathon Acquisition said Monday it has agreed to acquire charter container vessel operator Global Ship Lease for $1 billion.
The special purpose acquisition vehicle, established by former Apollo Management executive Michael Gross in New York, will acquire Global Ship from French shipping company CMA CGM and own 66% of the business once the transaction is completed. CMA CGM will own the remaining 34%.
"Global Ship Lease is an ideal candidate for a SPAC: Marathon's upfront cash payment will enable Global Ship Lease to expand its fleet, and the cash proceeds from warrant exercises are expected to provide built-in financing for future fleet growth,” said Gross, chairman and chief executive of Marathon, in a statement.
Marathon is paying $310 million in cash and 25.2 million shares under terms of its purchase agreement. The transaction is expected to be completed in the third quarter.
As part of the deal, Global Ship's senior management team, led by CEO Ian Webber, will continue running the company, which owns 12 container ships. In addition, the shipping company plans to acquire an additional five vessels to increase its fleet of ships to 17.
Marathon raised $300 million from its initial public offering on the American Stock Exchange in 2006. The SPAC’s shares declined by 1.7% to $7.73 per share, compared with a previous close of $7.87 a share.
The container shipping industry is the fastest growing sector of international shipping, showing an average annual volume increase of more than 10% per year since the early 1990s as a result of world trade, according to Marathon.
Citigroup is serving as financial advisor to Global Ship, which is relying on Orrick, Herrington & Sutcliffe for counsel.
Simpson Thacher & Bartlett and Akin Gump Strauss Hauer & Feld are providing counsel to Marathon.
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