NEWS RELEASE ALLIANCE CAPITAL [LOGO]
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FOR IMMEDIATE RELEASE
ALLIANCE CAPITAL MANAGEMENT ANNOUNCES
ACQUISITION OF SANFORD C. BERNSTEIN INC.
NEW YORK, NY, JUNE 20, 2000 - Alliance Capital Management L.P.
("Alliance Capital"), Alliance Capital Management Holding L.P. ("Alliance
Holding") (NYSE: AC) and Sanford C. Bernstein Inc. ("Bernstein") announced here
today they have entered into a definitive agreement whereby Alliance Capital
will acquire the assets and liabilities of Bernstein for an aggregate current
value of approximately $3.5 billion. The consideration will consist of
approximately $1.5 billion in cash and 40.8 million newly issued limited
partnership units of Alliance Capital.
Following the acquisition Alliance Capital will have approximately $475
billion of assets under management and annual revenues of about $3.2 billion.
The combined firm, which will have 4,000 employees, will manage investment
assets for approximately 2,600 institutional and 15,000 private client accounts,
as well as $189 billion in mutual fund assets in 5.8 million mutual fund
shareholder accounts worldwide.
"We are very pleased to be joining forces with Sanford C. Bernstein
Inc.," said Bruce W. Calvert, Chief Executive Officer of Alliance Capital.
"Research excellence has long been the cornerstone of efforts to provide
superior performance for clients at both firms. Together, we will have one of
the premier equity and fixed income investment research capabilities in the
world, with 250 research analysts around the globe."
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Mr. Calvert continued, "Alliance Capital is a recognized leader in the
growth style of investing; Bernstein in the value style. By continuing to pursue
each firm's distinctive style, we will be able to compete effectively for
institutional investment management assignments in any of the world's major
markets. Bernstein has a superb private client franchise; Alliance Capital is a
leader in mutual funds. Both businesses have excellent growth prospects, which
will be enhanced as we cross sell each other's investment products to these
clienteles. And, Bernstein's highly regarded institutional services business
will continue to be an outstanding platform for providing research to a broad
cross section of institutional investors around the world."
"Overall, we believe that the combined business will demonstrate higher
and more stable earnings growth than either of us might achieve independently.
Employees will have an exciting new range of career opportunities and clients
will benefit from an enhanced research capability and a broader array of `best
of breed' products," Mr. Calvert concluded.
"After much success during the last 32 years as an independent
organization, we are about to embark on a course that promises to open far
larger opportunities for our clients and for us," said Lewis A. Sanders,
Chairman and Chief Executive Officer of Bernstein. "The Alliance Capital -
Bernstein partnership is not about cost reduction; there is only modest overlap.
It is about bringing together two outstanding organizations with highly
complementary skills. The scale and balance of the combined firms should lead to
high client satisfaction and therefore faster and more predictable growth."
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POST MERGER ORGANIZATION
Following the merger, Alliance Capital will appoint a six-member
Executive Committee to manage the wide-ranging activities of the firm. The
Executive Committee will be comprised of both firms' current top executives:
Bruce W. Calvert, John D. Carifa, Alfred Harrison, and Dave H. Williams - all of
Alliance - and from Bernstein, Lewis A. Sanders, Chairman and Chief Executive
Officer , and President, Roger Hertog.
Bruce W. Calvert and John D. Carifa will continue to serve as Vice
Chairman and Chief Executive Officer and President and Chief Operating Officer,
respectively. Lewis A. Sanders, Chairman and Chief Executive Officer of
Bernstein, will serve as Vice Chairman and Chief Investment Officer, and will
also continue his responsibilities for the Bernstein institutional services
group. Roger Hertog, President, Bernstein will become Vice Chairman, taking
oversight responsibility for the firm's institutional and private client sales
and marketing organizations. Dave H. Williams will continue as Chairman of the
Board and Alfred Harrison will continue in his Vice Chairman role and in
overseeing the Large Capitalization Growth equity group. Kathleen A. Corbet,
Executive Vice President, will assume management responsibility for the firm's
fixed income activities.
Lewis A. Sanders and Roger Hertog will be elected to The Board of
Directors of Alliance Capital's general partner at the closing of the
transaction.
STRUCTURE OF THE TRANSACTION
The definitive agreement provides for the acquisition of substantially
all of the assets and liabilities of Bernstein by Alliance Capital. The
consideration for the acquisition will be approximately $1.5 billion in cash and
40.8 million of newly issued Alliance Capital limited
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partnership units which approximates 10-11 times estimated cash flow. AXA
Financial, Inc., a member of the worldwide AXA Group and the holder of a
majority interest in Alliance Capital, has indicated its support for this
transaction and has agreed to purchase newly issued Alliance Capital limited
partnership units for $1.6 billion to provide Alliance Capital with the cash
portion of the consideration. The consideration may be adjusted downward if a
certain base level of Bernstein client revenues is not achieved at closing.
Thirty eight million of the units issued to Bernstein pursuant to this
transaction may not be sold for two years following closing, and are subject to
a 20% limit on sales per year thereafter. "The transaction structure solidifies
the long-term commitment that the shareholders and principals at Bernstein will
have to the Alliance Bernstein combination. In addition, we can achieve our
long-stated objective of providing attractive equity incentives to our staff,
who will participate along with other unitholders in the growth opportunities
afforded through this union," said Lewis A. Sanders.
Alliance Capital will also establish a new three-year deferred
compensation plan and will make minimum annual cash incentive compensation
payments over three years to eligible Bernstein employees. Certain Bernstein
employees have entered into employment agreements.
Based on the estimated financial results of the merged organization,
Operating Net Income per Unit before amortization of goodwill and Distributions
per Unit from Available Cash Flow are expected to be approximately 5% accretive.
Amortization of goodwill from the transaction is expected to result in dilution
of approximately 10% to Net Earnings per Unit. The transaction will be accounted
for under the purchase method of accounting.
The transaction is subject to the receipt of various regulatory
approvals, the maintenance of a minimum Bernstein client revenue base, the
affirmative vote of Unitholders of Alliance
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Holding, and the affirmative vote of Bernstein shareholders which the parties
have agreed will take place in the next 30 days. Alliance Capital has entered
into voting agreements with Bernstein shareholders representing more than 80% of
the outstanding common shares of Bernstein. However, in certain circumstances,
Bernstein's board of directors may terminate the transaction if it receives a
superior proposal from a third party and Alliance Capital declines to match that
proposal. Bernstein has agreed to pay Alliance Capital a $125 million breakup
fee plus expenses if it terminates the transaction in those circumstances. The
transaction is expected to close in the fourth quarter 2000.
Alliance Capital has retained The Blackstone Group and Salomon Smith
Barney as financial advisors to the transaction. Bernstein has retained Merrill
Lynch as financial advisor to the transaction. AXA Financial, Inc. has retained
Donaldson, Lufkin & Jenrette and Goldman, Sachs & Co. as financial advisors to
the transaction.
FORWARD LOOKING STATEMENTS
Certain statements included in this release are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform At of
1995. Such forward-looking statements are subject to risks, uncertainties, and
other factors that could cause actual results to differ materially from future
results expressed or implied by such forward-looking statements.
The most significant of such factors include but are not limited to, the
following: the performance of financial markets, the investment performance of
Alliance Capital's and Bernstein's sponsored investment products and separately
managed accounts, general economic conditions, future acquisitions, competitive
conditions, and government regulations, including changes in tax rates.
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Alliance Capital, Alliance Holding, and Bernstein caution readers to carefully
consider such factors. Further, such forward-looking statements speak only as of
the date on which such statements are made; Alliance Capital, Alliance Holding
and Bernstein undertake no obligation to update any forward-looking statements
to reflect events or circumstances after the date of such statements.
ABOUT ALLIANCE CAPITAL
Alliance Capital is a leading global investment management firm best
known for its growth style of equity investing. Assets under management at March
31, 2000 totaled $394 billion. Alliance Capital manages retirement assets for
many of the largest public and private employee benefit plans (including 28 of
the U.S. FORTUNE 100 companies), for public employee retirement funds in 31 out
of the 50 U.S. states, and for foundations, endowments, banks, an insurance
companies worldwide. Alliance Capital is also one of America's largest mutual
fund sponsors, with approximately 5.8 million shareholder accounts and a family
of diversified fund portfolios that are distributed globally.
Alliance Holding owns approximately 42% of Alliance Capital, the
operating private partnership. AXA Financial owns interests in both Alliance
Holding and Alliance Capital, amounting to an approximate 57% economic interest
in Alliance Capital.
ABOUT BERNSTEIN
Sanford C. Bernstein Inc. is the largest value-oriented manager of
institutional assets in the industry, operating in foreign markets as well as
the U.S., in bonds as well as stocks, and in
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emerging as well as developed markets. It also ranks among the largest managers
of private portfolios, with an emphasis on investment planning for taxable
assets and an array of proprietary techniques for managing taxable portfolios.
Assets under management total approximately $86 billion.
Bernstein was founded in 1967 to manage private investments, and its
mission soon expanded to include institutional asset management and investment
research. Its much-quoted company and industry research, embodied in the
so-called Bernstein "black books," is recognized as among the most thorough and
thoughtful produced anywhere.
Bernstein, a privately owned company, employs a staff of 1,400
including some 450 investment professionals, about half of whom are shareholders
or principals.
CONTACT INFORMATION:
ALLIANCE CAPITAL:
Media: Shira Zackai (212) 969-6387
Peter Cullum and Newton Lamson, Donley Communications
(212) 751-6126.
Investors: Anne Drennan (212) 969-6443
Karen Caddick (212) 969-6414
BERNSTEIN:
Media and
Investors: Roger Hertog (212) 756-4389
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