M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Monday, June 11, 2007

Blackstone Cashs In

Blackstone filed its fourth amendment to its registration statement today.  Blackstone intends to sell approximately 133.33 million common units at between $29 and $31 per unit giving Blackstone a market cap of over $33 billion if it prices at $31 per unit.  The amendment also finally discloses the size of the payday for Blackstone's founders, Stephen Schwarzman and Peter Peterson.  Schwarzman, Blackstone’s chief executive officer, will receive $449 million and up to $677 million if the greenshow is exercised.  Based on an offering price of $30 per unit, Schwarzman's post-ipo stake will be worth $7.7 billion and constitute a 24 percent stake in the company.

Peterson, who has announced his retirement for next year, is expected to receive $1.88 billion (no greenshoe option here -- he is going out full in the initial offering).  He will retain a four percent holding.  All told, the total haul for Blackstone's founders will be about $2.33 billion assuming the exercise of the greenshoe. 

For those who wonder whether the Blackstone founders are cashing out at the top, the filing also disclosed that in 2006 cash distributions for the two were $398.3 million for Schwarzman and $213 million for Peterson.  As for the offering itself and leaving aside whether there is indeed a private equity bubble, I wonder who would want to buy these non-voting interests in Blackstone at a time when one of the founders is leaving and cashing in and the other is pocketing a significant stake and monetizing the remainder.  At least with internet ipos, the founders had to wait 180 days to sell and offered their shareholders a vote in the operation of the company.  Caveat Emptor.   


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