Tailwind Financial (stock symbol: [t]TNF[/t] ), which raised $100 million when it went public in April 2007, has reached an agreement to acquire Asset Alliance Corporation, a "management firm specializing in alternative investmens," for $80.2 million.
Asset Alliance Corporation to Access Public Markets in Reverse Merger with Tailwind Financial Inc
Tuesday January 8, 8:34 pm ET
Asset Alliance to become the first US publicly traded company focused on acquiring interests in and seeding alternative asset managers
NEW YORK AND TORONTO, Jan. 8 /PRNewswire-FirstCall/ -- Asset Alliance Corporation ("Asset Alliance"), a multi-faceted investment management firm specializing in alternative investments, and Tailwind Financial Inc. ("Tailwind") (Amex: TNF - News), a blank check development stage company, have announced that they have entered into an Agreement and Plan of Merger whereby Tailwind will acquire all of the outstanding common stock of Asset Alliance in exchange for shares of Tailwind common stock, allowing Asset Alliance to access the public markets through the proposed transaction with Tailwind. Asset Alliance has equity interests in nine affiliated asset managers and manages four funds of funds. Including affiliate managers in which Asset Alliance has an interest and its own funds of funds, Asset Alliance had total assets under management of approximately $3.5 billion as of September 30, 2007.
The transaction values Asset Alliance at approximately $80.2 million (approximately $99.1 million with the full earn-out) based on the closing price of Tailwind common stock on January 8, 2008 or $85.0 million (approximately $105.0 million with the full earn-out) based on the $8.00 per share placed in Trust by Tailwind pursuant to the terms of its IPO. Asset Alliance's gross revenue, GAAP net income and Adjusted EBITDA for the twelve months ending September 30, 2007 were $32.9 million, $(17.4) million and $9.8 million, respectively, resulting in a trailing Total Enterprise Value/Adjusted EBITDA multiple of 7.6x based on the closing price of Tailwind common stock on January 8, 2008 and Asset Alliance's net cash of $6.1 million as of September 30, 2007. The boards of directors of both Asset Alliance and Tailwind have unanimously approved the transaction.
The consideration for 100% of the shares of Asset Alliance will be in the form of:
-- 10.625 million shares of Tailwind common stock (plus up to an additional 2.5 million shares based on the achievement of certain EBITDA performance milestones in 2008, 2009 and 2010);
-- The assumption of 407,741 outstanding Asset Alliance warrants with a strike price of $8.35 before June 30, 2008 or $8.75 after June 30, 2008 which will be appropriately converted into warrants to purchase Tailwind common stock with adjusted strike prices, in each case pursuant to the terms of the Agreement and Plan of Merger, and expiring on June 30, 2009;
-- The assumption of 428,083 outstanding Asset Alliance options with a weighted average strike price of $15.71 which will be appropriately converted into options to purchase Tailwind common stock with adjusted strike prices, in each case pursuant to the terms of the Agreement and Plan of Merger, and expiration dates between March of 2009 and January of 2015;
-- A number of shares of Tailwind common stock equal to the after-tax earnings of Asset Alliance between September 30, 2007 and the closing date (if such amount is greater than zero) divided by $8.00 (the "Earnings Adjustment"). The after-tax earnings used to determine the Earnings Adjustment will not be distributed to shareholders of Asset Alliance.
The transaction is subject to Tailwind and Asset Alliance shareholder approvals, regulatory approvals and customary closing conditions. Excluding the potential impact of the Earnings Adjustment and assuming a conversion price based upon a valuation of $85.0 million, current Tailwind shareholders will own 59.5% (or 54.3% with the full earn-out) of the combined company's basic common shares and 65.2% (or 60.3% with the full earn-out) on a fully diluted basis (using the treasury stock method and assuming an $8.00 per share stock price and no exercise of Tailwind public shareholder redemption rights).
The combined company's management team will be led by Bruce H. Lipnick, Chairman and Chief Executive Officer, Arnold L. Mintz, President and Chief Operating Officer, and Stephen G. Bondi, Executive Vice President and Chief Financial Officer. Messrs. Lipnick and Mintz founded Asset Alliance in 1996 and Mr. Bondi joined Asset Alliance in July 2000. All three executives have extensive experience and relationships in the asset management and alternative asset management industries. "Asset Alliance has built a strong foundation of cash flows underpinned by a diverse group of affiliated hedge fund managers and fund of fund products. We expect that accessing the public markets through Tailwind will enable Asset Alliance to continue to build the platform, benefit from economies of scale and increase its brand awareness in major markets including the US, Europe, Latin America and the Middle East," noted Mr. Mintz. Mr. Lipnick added, "The proposed transaction will represent an opportunity for value creation as we believe there are several acquisition and seeding candidates that would be complementary to the growth and diversification of our business. In addition to the cash that we will have as a result of the proposed transaction, the ability to issue public stock should be very attractive to potential new affiliates and Asset Alliance personnel."
Gordon A. McMillan, Tailwind's Chairman said, "Asset Alliance's unique business model has led to several successful partnerships with a number of alternative asset managers since its founding in 1996. We believe Asset Alliance is well-positioned to benefit from industry dynamics over the next several years and will represent an excellent value for Tailwind shareholders."
"We have been impressed by the professionalism, knowledge and experience of the team at Asset Alliance," echoed Andrew A. McKay, Tailwind's CEO, adding that, "we look forward to working toward continued growth."
Upon the consummation of the transaction, the combined entity will change its name to Asset Alliance Corporation and expects to change its trading symbol to reflect the new name. The board of directors of the combined entity will consist of seven individuals including Messrs. Lipnick and Mintz of Asset Alliance, Mr. McMillan of Tailwind and four independent directors selected by Asset Alliance who will be elected to take office upon closing of the merger.
Additional information, including historical financial information and data concerning Asset Alliance, its affiliates and its funds of funds products will be contained in a management presentation which Tailwind will file with the Securities and Exchange Commission. Ladenburg Thalmann & Co. Inc. and Torsiello Capital Advisors Inc. are serving as financial advisors to Asset Alliance. Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel to Asset Alliance and Bingham McCutchen LLP is serving as legal counsel to Tailwind. Deutsche Bank Securities Inc. served as underwriter for Tailwind's IPO in April 2007.
<snip>
biz.yahoo.com |
