Blackstone (BX) has signed an all-cash deal of $2.2 billion to acquire 9.9% equity stake in American International Group’s (AIG) Life & Retirement business. Shares of BX and AIG have gained 3.7% and 7.5%, respectively.
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The deal is expected to close in the third quarter of 2021, subject to HSR approval and other customary closing conditions.
As per the terms of the deal, Blackstone and AIG are bonded in a long-term strategic asset management relationship under which Blackstone will, at first, manage $50 billion of Life & Retirement’s existing investment portfolio upon closing of the equity investment. The amount will gradually increase to $92.5 billion over a span of six years.
Along with this deal, Blackstone Real Estate Income Trust (BREIT), a perpetual-life real estate investment platform, has entered a cash deal to acquire AIG’s interests in a U.S. affordable housing portfolio for nearly $5.1 billion.
This transaction is likely to close in the fourth quarter of 2021. (See Blackstone stock chart on TipRanks)
President and COO of Blackstone Jon Gray will be joining the Life & Retirement Board of Directors. “We believe our leading private credit origination platform will play an important role to help meet long-term policyholder obligations while maintaining strong credit quality,” Gray said.
On July 12, Deutsche Bank analyst Brian Bedell maintained a Hold rating on the stock and raised the price target to $86 from $79 (12.8% downside potential from the current level).
The analyst is of the opinion that improving organic growth trends, less pressure on fee rates and a “generally constructive” macro growth outlook will support Blackstone in Q3 earnings season.
Consensus among analysts is a Strong Buy based on 9 Buys and 3 Holds. The average Blackstone price target stands at $93.36 and implies downside potential of 5.4% from current levels.
TipRanks data shows that financial blogger opinions are 88% Bullish on BX, compared to the sector average of 70%.
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