Marathon Acquisition Corp. on Monday said it will buy a 66 percent stake in London-based Global Ship Lease Inc. in a deal that values the owner and operator of container ships at about $1 billion.
Global Ship Lease, currently a subsidiary of CMA CGM S.A. of France, would become publicly traded after the transaction.
The company, which owns 12 container ships and has contracts to buy an additional five from CMA CGM, will have about $511 million of debt once it has all 17 ships, and will pay roughly a 9 percent dividend after the merger.
Marathon is a special-purpose acquisition vehicle, or "blank-check" company. Such vehicles raise money in initial public offerings to buy companies within a certain time period, typically a couple of years.
Created in 2006, Marathon is run by Michael Gross, a founder of private equity firm Apollo Management LP who is now at the hedge fund Magnetar Capital LLC.
"Global Ship Lease is an ideal candidate for a SPAC," Gross said in a statement. "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 in-built financing for future fleet growth."
The merger is expected to be completed early in the third quarter of 2008.
Existing lenders have already consented to the deal. Global Ship Lease will have more than $270 million in available credit capacity after delivery of the contracted fleet.
The existing Global Ship Lease senior management team will continue to lead the company after the deal closes, Marathon said.
Following the merger, Global Ship Lease will have an independent board with no representation from CMA CGM.
Former Chairman Flemming Jacobs, who was instrumental in the creation of Global Ship Lease, has chosen to step down for reasons unrelated to the merger, Marathon said.