Blackstone Inc.

File:Blackstone Group Logo.gif

Blackstone Group provides private equity, financial advisory, and investment management services. The company is based in New York City, with offices in Atlanta, Boston, London, Hamburg, Paris, Mumbai and Hong Kong. One of the world's largest private equity firms, it is part of the migration of companies from public to private hands — a total of some US$370 billion in deals in the United States in 2006.

History

Blackstone Group L.P. (NYSE: BX) was founded in 1985 by Peter G. Peterson and Stephen A. Schwarzman. "Blackstone" is a wordplay on the founders' names, Stephen A. Schwarzman and Peter G. Peterson. Schwarz is German for black. Peter, or Petros in Greek, means stone or rock.

Business segments

• Corporate private equity - manages holdings in Allied Waste, Graham Packaging, Celanese, Nalco, Health Markets, Houghton Mifflin, American Axle, Prime Hospitality, Legoland, Universal Studios Florida, La Quinta Inn and Hilton Hotels Corporation.
• Real estate - holds more than 13,000,000 square feet (1,200,000 m²) of real estate in Boston, New York, San Francisco and Washington, DC.
• Marketable alternative asset management - offers funds of hedge funds, first used only by internal investments, now open to clients; raising capital for hedge funds, private equity, and real estate funds.
  • Funds of hedge funds
  • Mezzanine funds
  • Senior debt vehicles
  • Proprietary hedge funds
  • Closed-end mutual funds
• Financial advisory
  • Corporate and mergers and acquisitions advisory - clients include Microsoft, Procter & Gamble, Verizon, Comcast, and Sony.
  • Restructuring and reorganization advisory - clients include Xerox, Enron, Bally Total Fitness and Global Crossing.
  • Fund placement advisory group

Recent activity

In recent years Blackstone has made significant investments in the hotel and commercial real estate industries by buying and taking private seven large publicly-traded firms:

• On February 1, 2008, Microsoft announced that it will be advised by the Blackstone Group in the unsolicited $44.6 billion bid for Yahoo, along with Morgan Stanley.

• On November 15, 2007, Kraft Foods announced that it will sell its Post cereals business to Ralcorp in a tax-free Reverse Morris Trust transaction valued at $2.6 billion. Blackstone Group advised Kraft Foods.

• On July 3, 2007, Blackstone Group and Hilton Hotels Corporation announced plans for the Blackstone Group to acquire Hilton Hotels Corporation with all debt assumed in an all cash deal valued at $26 billion.

• On July 1, 2007, Blackstone sold Global Tower Partners to Macquarie Infrastructure Partners for an enterprise value of $1.425 billion. Global Tower Partners is a leading owner and operator of wireless towers and sites.

• In May 2007, the government of the People's Republic of China through its China Investment Corporation agreed to buy $3 billion non-voting stock in Blackstone, which is slightly less than a 10% stake. As a result Blackstone has increased its initial public offering to $7.8 billion worth of stock, which includes the China stake.
• In May, 2007, Blackstone agreed to purchase Alliance Data for $7.8 billion but changed its mind in January, 2008.

• In April, 2007, Blackstone agreed to sell Extended Stay Hotels, based in Spartanburg, South Carolina and its brands to The Lightstone Group for $8 billion.

• In March, 2007, Blackstone filed for $4 billion initial public offering, preparing to change private to a public firm.

• In March, 2007 Blackstone purchased The Tussauds Group, for £1 billion from Dubai International Capital.

• In December, 2006, Blackstone as part of a Consortium of private equity funds including Goldman Sachs Capital Partners, Kohlberg Kravis Roberts & Co. and TPG, agreed to purchase all stock shares of Biomet for approximately $10.9 billion. Biomet is a worldwide manufacturer and marketer of hip, knee, shoulder, and spinal implants and supporting surgical supplies for the orthopedic industry.

• In November, 2006, Blackstone agreed through its affiliate, Blackstone Real Estate Partners, to acquire billionaire Sam Zell's Equity Office Properties Trust, for approximately $39 billion. Goldman Sachs, Bank of America, Morgan Stanley and a few others acted as financial advisors to Blackstone in the deal. Prior to the takeover Equity Office was the nation’s largest publicly held office building owner and manager. Its total office portfolio consisted of whole or partial interests in 580 buildings comprising 108,600,000 square feet (10,090,000 m²) in 16 states and the District of Columbia. The acquisition was the biggest takeover of a real estate company and the largest private equity deal in history.

• In September, 2006, Blackstone led a consortium buyout of Freescale Semiconductor. The other members of the consortium were the Carlyle Group, Permira Funds and the Texas Pacific Group.

• In July, 2006, Blackstone Capital Partners agreed to purchase Encore Medical for $870 million in cash. Encore makes spine, knee, hip and shoulder implants for the orthopedic industry.

• In June, 2006, Blackstone entered into a definitive agreement with Cendant Corporation to acquire Travelport, its travel distribution services business for about $4.3B in cash. Travelport includes the Orbitz travel reservation website used by consumers, the Galileo computer reservations system used by airlines and travel agents, Gulliver’s wholesale travel business, and other travel-related software brands and solutions.

• Also in June, 2006, Blackstone teamed up with Canadian property firm Brookfield Properties to acquire U.S. office REIT Trizec Properties. Blackstone and Brookfield valued Trizec at $8.9 billion.

• Since April, 2006, Blackstone is a major shareholder (4.5%) of Germany's Deutsche Telekom.

• In February, 2006, Blackstone announced it would purchase Meristar Hospitality Corporation and its 57 hotel assets for $2.6B. Meristar's additional 10 Florida resorts (which Blackstone announced it would acquire separately several weeks before buying the entire company) were relaunched as members of the LXR brand.

• In January, 2006, Blackstone closed on its $3.4 billion previously announced acquisition of La Quinta Corporation, an owner, manager, and franchiser of limited service hotels under the La Quinta Inns, La Quinta Inns & Suites, and Baymont Inn & Suites brands. In March, 2006 Blackstone announced it would sell the Baymont Inn brand to the Cendant Hotel Group and re-brand Baymont's existing hotels as La Quintas.

• In June, 2005, Blackstone acquired Wyndham International for $3.2 billion. The Wyndham brand and management business was sold to Cendant Corp and 14 full-service Wyndham hotels located primarily in urban locations were sold to Columbia Sussex, a private hotel ownership and management business based outside Cincinnati. The 21 hotels that remained consisted of Wyndham's prized resort assets and included such properties as El Conquistador Resort & Spa in Puerto Rico, The Reach Resort in Key West, FL, and Carmel Valley Ranch in Carmel, CA. These assets were converted to the LXR brand. Summerfield Suites, Wyndham's extended stay offering was sold to Global Hyatt and renamed Hyatt Summerfield Suites.

• In October, 2004, Boca Resorts, Inc. agreed to be sold to Blackstone for $1.25 billion. Boca Resorts owned and operated five resort properties in Florida that were all transitioned to the LXR Luxury Resorts brand.

• In August, 2004, Blackstone paid $800 million to acquire Prime Hospitality. Prime's AmeriSuites brand was quickly sold to Global Hyatt and has since been reborn as Hyatt Place. Thirty-seven Wellesley Inns were converted to the Extended StayAmerica brand and the Prime Hotel Saratoga Springs was renamed The Saratoga and joined the LXR Luxury Resorts brand.

• In March, 2004, its major affiliate, Blackstone Real Estate Partners, paid $1.9 billion to acquire Extended StayAmerica. ESA has since been combined with Blackstone's previously-owned Homestead Village brand and rechristened Extended Stay Hotels.

External links

• The Blackstone Group website