Blackstone plans to merge its record keeping and benefits company Alight Solutions with a special purpose acquisition company, Foley Trasimene Acquisition Corp., to create a new publicly traded company, Alight Inc.
The transaction will accelerate Alight's efforts to expand the use of cloud-based computing for a variety of benefits management ranging from retirement to health care to payroll, officials of Alight and Foley Trasimene said Monday.
Three years ago, Blackstone acquired Alight, then known as Aon Hewitt Associates, from Aon for $4.3 billion plus up to $500 million based on future performance.
The transaction excluded the Aon Hewitt investment consulting business. Blackstone tried but then withdrew an effort to spin off Alight through an initial public offering in 2019.
The new Alight will have a pro forma enterprise value — equity plus debt plus cash — of about $7.3 billion when the deal closes, according to a joint news release by Foley Trasimene and Alight officials.
Special purpose acquisition companies, often called blank-check companies, are designed to take private companies public without the traditional IPO process. The news release described Foley Trasimene's goal as "to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities."
The deal requires approval by Foley Trasimene stockholders as well as the Securities and Exchange Commission "and other customary closing conditions, including the receipt of certain regulatory approvals," the news release said. The transaction is expected to close in the second quarter of 2021.
The merged company's eight-member board of directors will have three appointed by Foley Trasimene, three directors appointed by Blackstone, Alight CEO Stephan Scholl and one other independent director, the news release said. William P. Foley II, founder and chairman of Foley Trasimene Acquisition Corp., Las Vegas, will be chairman of Alight Inc.
Alight ranks fifth among defined contribution plan record keepers, with responsibility for $459.2 billion total assets from 185 plan sponsors representing 4.8 million participants, according to Pensions & Investments Research Center, based on data as of Sept. 30, 2019.
Monday's news release said Alight now has more than $480 billion in defined contribution assets under administration.
During a telephone conference with investors at which Mr. Scholl and Mr. Foley took no questions, they explained that the merger will help hasten and expand Alight's embrace of technology-driven products and services.
"We support the long-term plan presented by management to transform Alight into a business process as a service enterprise where we can leverage its existing leading industry position to substantially grow revenue and EBITDA," said Mr. Foley, according to a transcript of the conference call. Earnings before interest, taxes, depreciation and amortization is a common way to judge a company's operating performance.
"Alight has the technology and data to help employers move the needle on employee engagement which influences productivity (and) health costs," he said.
Business process as a service enterprise is an outsourcing strategy that uses a cloud computing approach to increase automation and reduce labor costs and overall costs.
"We know that an employee engagement platform can only be delivered by bringing deep domain knowledge and cloud-based technology products wrapped with a services capability," Mr. Scholl said according to the transcript.
"A traditional services model can't transform the employee experience the way we know it has to, and a software solution alone can't solve it either," he added. "Only a business process as a service, or BPaaS business model, can deliver a holistic solution."
