Private equity firm Blackstone Group said last night it plans to buy hedge fund GSO Capital Partners for up to $930 million in cash and stock.
The private equity firm also announced a $500 million stock buyback plan, which helped send its share price 10 per cent higher to close at $19.94.
Blackstone, which has total assets under management of $98 billion, said the GSO deal would create one of the largest credit platforms in the alternative asset management business, giving it more than $21 billion of assets under management.
GSO - which runs a hedge fund, mezzanine fund and senior debt fund - has about $10 billion under management.
The deal comes after turmoil in the credit markets in the summer effectively closed the door for large leveraged buyout deals. Buyout volume dropped 62 per cent in the second half of 2007 compared with the first half, data from M&A research firm Dealogic shows.