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PRINT THIS PAGE Blackstone to acquire GSO; announces $500m unit buy-back plan10/01/2008. Source: AltAssets.
The Blackstone Group has agreed to acquire GSO Capital Partners, an alternative asset manager specialising in the leveraged finance marketplace with approximately $10bn under management, for up to $930m. GSO manages a multi-strategy credit hedge fund, a mezzanine fund, a senior debt fund and various CLO vehicles. Blackstone will pay in cash and Blackstone Holdings units currently valued at $620m which will be transferred at closing, plus up to $310m to be paid over the next five years contingent upon the realisation of specified earnings targets. In addition, compensatory payments may be paid based on vesting and performance. Blackstone expects this transaction to be nondilutive.
The acquisition of GSO will augment Blackstone's global alternative investment platform in the credit area, adding several new lines of business and creating significant synergies and opportunities for the firm.
Blackstone chairman and CEO Stephen A Schwarzman said, 'The combination of GSO's businesses with our existing corporate debt operations will produce one of the largest credit platforms in the alternative asset management business, with over $21bn of total assets under management. Given the current dislocation in the credit markets, this is an ideal time to create a more powerful, diversified platform from which to grow Blackstone's business.'
Hamilton E James, president and COO of Blackstone, added, 'I have a long history with many of the GSO principals. They are first-class professionals whom we hold in the highest regard. They bring superb market knowledge, depth of talent and experience to an outstanding team in place here at Blackstone. By accessing our considerable private equity and other resources, we expect this group to generate substantial incremental value for the limited partners of both firms' credit funds as well as for Blackstone's common unitholders.'
Blackstone has also announced that it has authorised the repurchase of up to $500m of Blackstone common units and Blackstone Holdings units. Blackstone said that its current intention is to seek to repurchase at least enough units to offset the issuance of units as part of the consideration in the GSO acquisition.
'We believe that our common units are undervalued,' said James, 'and we therefore intend to offset the issuance of Holdings units to the owners of GSO by repurchasing the same amount of units from existing holders.'
Blackstone's shares have fallen since the IPO in June 2007.
Blackstone is currently investing the largest buy-out fund on record, the $21.7bn Blackstone Capital Partners V fund.
The firm is reportedly in talks to also acquire Close Brothers for up to £1.6bn.
Copyright © 2008 AltAssets
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