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Blackstone Inks Deal with Intertrust

Zacks Equity Research

The Blackstone Group LP (BX) reached an agreement to acquire Intertrust – a trust and corporate management company – from Holland-based Waterland Private Equity Investments. The deal is anticipated to close in the upcoming months after receiving regulatory approvals.

The financial details of the transaction were undisclosed. However, according to market rumors, Blackstone paid roughly €675 million ($884 million) for the deal. The amount is approximately nine times more than Intertrust's gross operating profit.

In November this year, Reuters reported that Blackstone was in the midst of discussions to acquire Intertrust from its parent company, Waterland Private Equity Investments. Blackstone, Cinven – a U.K. based private equity firm – as well as Pamplona Capital Management – a Spanish private equity firm – had submitted second round bids for Intertrust during the same month. The Carlyle Group LP (CG) and Goldman Sachs Private Equity, a unit of The Goldman Sachs Group, Inc. (GS), were also in the queue to buy this management company. Finally, Blackstone won the race and grabbed the opportunity.

Netherlands’ bilateral tax agreements with other countries make it an attractive location for foreign countries to set up holding companies. Due to these lenient taxation laws the companies operating in the country do not fall under double taxation.

Blackstone’s Other Acquisitions

Blackstone has completed a string of purchases over the past few months. In November, Blackstone Capital Partners V, L.P − a private equity fund managed by Blackstone – announced the completion of the acquisition of GCA Services Group from Nautic Partners, L.L.C. and other minority shareholders.

Later that month, it also closed the acquisition of Vivint Inc, a security provider, offering home automation and technology services. The total value of the acquisition was more than $2 billion.

Our Viewpoint

Blackstone’s recent acquisitions reflect its strong liquidity. Additionally, these acquisitions have the capacity to fuel the company’s overall growth in the future.

Blackstone currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We believe that the company’s diversified revenue mix, footprints along with steady growth in assets under management (:AUM) will supplement its future growth as well. However, the sluggish economic recovery and regulatory changes will dent its financials to some extent.

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