Armstrong to Buy Stake in SRAM

SportsOneSource.com - Sporting Goods Business UPDATE

Armstrong to Buy Stake in SRAM
SportsOneSource Media Posted: 9/25/2008
Lance Armstrong is switching his allegiance from Shimano to SRAM in a big way, according to various media reports. Armstrong announced Wednesday that he would compete in the 2009 Tour de France with Kazakhstan-based Team Astana, which uses SRAM components. Armstrong has traditionaly raced with components from SRAM's Japanese competitor Shimano.

Also, the Wall Street Journal reported Thursday that Armstrong is investing several million in SRAM alongside Lehman Brothers Merchant Bank. Armstrong will use SRAM components in all his races and serve as a technical advisor to SRAM, according to the report.

The newspaper reported that as many as 20 private equity firms competed to buy a stake in the Chicago company. Lehman got the inside track when one of its bankers met Armstrong at a Rolling Stones concert in Rome in 2007. The banker later asked Armstrong to help evaluate SRAM and then invited him to invest along side Lehman. The paper estimated Lehman paid $200 million for its 40% stake in SRAM, which was looking for a strategic partner to take on Shimano globally.

Team Astana's Alberto Contador and Team Saunier Duval-Scott's Riccardo Ricco placed first and second in the Tour of Italy earlier this year. Both teams rode with SRAM's Gruppo RED - the first component family to weigh less than 2,000 grams. Armstrong's return to the sport, however, is expected to generate much more interest not only in the Tour de France but road cycling in general.

A seven-time Tour de France champion, Armstrong has helped raise an estimated $260 million to fund cancer research despite allegations he has used performance enhancing drugs.

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