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Blackstone & Patria to Buy Gafisa Unit

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In an attempt to expand its overseas operations, The Blackstone Group L.P. (BX - Free Report) and Patria Investimentos entered into a definitive agreement with Gafisa S.A. (GFA - Free Report) to purchase the latter’s high-end Alphaville unit. Blackstone and Patria will collectively purchase 70% of Gafisa’s Alphaville Urbanismo residential-development business.

The transaction marks the first real estate deal for Blackstone, following the acquisition of Patria in 2010. The cash deal has been sealed for R$1.4 billion ($651 million). Moreover, the transaction has been valued at an equity price of about R$2 billion ($938 million). Further, the purchase of Gafisa’s unit by Blackstone and Patria will permit Gafisa to retain 30% of its stake.

Concurrently, Gafisa entered into an agreement with the founding partners of Alphaville to acquire the remaining 20% stake in the latter. The company currently holds 80% stake in Alphaville. This deal has been finalized for R$367 million ($172 million).

Moreover, Gafisa is expected to utilize the sale proceeds to reduce its debt-to-shareholder-equity ratio to 53% from 94% reported in the first quarter of 2013.

The transaction is scheduled for completion in the second half of 2013, subject to regulatory approval from the concerned entities.

Blackstone entered into a string of acquisitions over the past few months. In Apr 2013, Blackstone announced its agreement with Credit Suisse Group AG (CS - Free Report) to acquire the latter’s Strategic Partners, a dedicated secondary private equity business with about $9 billion in assets under management. The deal is expected to be completed in the third quarter of 2013. However, the terms of the transaction have not been disclosed. The deal is subject to customary closing conditions.

In Nov 2012, 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.

In the same 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.

Earlier in Sep 2012, Blackstone reached an agreement with real estate finance company – Capital Trust, Inc. – to acquire the latter’s investment unit. Further, the company is set to purchase 18.2% stake in Capital Trust, giving it the corresponding managerial rights. Overall, Blackstone is expected to shell out approximately $30 million for this deal.

Blackstone’s recent string of acquisitions reflects the company’s solid capital position. Moreover, these strategic deals are expected to fuel the company’s overall growth in the future.

Blackstone and Gafisa, both carry a Zacks Rank #3 (Hold).

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