SEOUL (Reuters) - U.S.-based Blackstone Group said on Tuesday it had agreed to acquire South Korean wholesale drug distributor Geo-Young in a deal with the company’s founder.

Blackstone did not disclose the value of its investment, but Maeil Business Newspaper said the private equity fund had agreed to buy a 46 percent stake in Geo-Young for 1.1 trillion won ($945.2 million) from another private equity firm.

Geo-Young founder and Chief Executive Cho Sun-hae would remain as a shareholder and retain her leadership role, Blackstone said in a statement.

The transaction was expected to close in the second quarter of 2019, subject to regulatory approvals, Blackstone added. </s> FILE PHOTO: The ticker and trading information for Blackstone Group is displayed at the post where it is traded on the floor of the New York Stock Exchange (NYSE) April 4, 2016. REUTERS/Brendan McDermid

SEOUL (Reuters) - U.S.-based Blackstone Group said on Tuesday it had agreed to acquire South Korean wholesale drug distributor Geo-Young in a deal with the company’s founder.

Blackstone did not disclose the value of its investment, but Maeil Business Newspaper said the private equity fund had agreed to buy a 46 percent stake in Geo-Young for 1.1 trillion won ($945.2 million) from another private equity firm.

Geo-Young founder and Chief Executive Cho Sun-hae would remain as a shareholder and retain her leadership role, Blackstone said in a statement.

The transaction was expected to close in the second quarter of 2019, subject to regulatory approvals, Blackstone added. </s> (Adds HNA Airport Holding and Dynasty Financial Partners; Updates Ant Financial, Wal-Mart, Williams Partners and EagleClaw Midstream Ventures)

April 17 (Reuters) - The following bids, mergers, acquisitions and disposals were reported by 2000 GMT on Monday:

** China’s Ant Financial has sweetened its bid for MoneyGram International Inc by over a third, beating a rival offer to gain approval from the U.S. electronic payment firm’s board, although it still faces regulatory hurdles.

** Wal-Mart Stores Inc’s bid for clothing retailer Bonobos, which surfaced last week, is the latest step in the company’s attempt to recover lost ground against Amazon.com Inc and others in the rapidly growing online fashion world, analysts and retail consultants said.

** Apple Inc is considering teaming up with its supplier Foxconn to bid for Toshiba Corp’s semiconductor business, Japanese public broadcaster NHK reported on Friday - the latest twist in the sale of the world’s second-biggest flash memory chipmaker.

** Diversified healthcare company Abbott Laboratories on Friday agreed to buy Alere Inc at a lower price than it had previously offered, after raising concerns about the accuracy of various representations, warranties and covenants made by Alere in the earlier agreement.

** Chrysler Chief Executive Sergio Marchionne rowed back on his search for a merger on Friday, saying the car maker was not in a position to seek deals for now and would focus instead on following its business plan.

** U.S. video streaming service provider Netflix is in talks with Indonesia’s top telecom firm PT Telekomunikasi Indonesia Tbk (Telkom) to roll out its service in the country, a spokesman at the Indonesian company said.

** Williams Partners LP said it would sell its stake in a unit that owns 88.46 percent of an olefins plant in Louisiana to Nova Chemicals for $2.1 billion in cash, as part of the pipeline operator’s efforts to focus on natural gas.

** EagleClaw Midstream Ventures LLC, the largest privately held operator of pipelines and processing facilities in West Texas’ Delaware Basin, said it agreed to be bought by funds managed by Blackstone Group LP for about $2 billion.

** U.S. buyout firm Leonard Green & Partners LP has prevailed in an auction to acquire Charter NEX Films Inc, a U.S. manufacturer of specialty films for the food and medical industries, for $1.5 billion, including debt, people familiar with the matter said.

** China’s Anbang Insurance Group will let its agreement to acquire U.S. annuities and life insurer Fidelity & Guaranty Life for $1.6 billion lapse, after failing to secure all the necessary regulatory approvals, people familiar with the matter said on Sunday.

** German lighting company Osram is on the lookout for acquisitions worth up to 500 million euros ($530 million), although there are no specific plans for a deal as yet, its finance chief told a German newspaper.

** Malaysian property developer S P Setia Bhd said on Friday it will buy privately held rival I&P; Group for over 3.5 billion ringgit ($794.55 million) to create one of the country’s largest real estate firms.

** Taiwan’s Powertech Technology said on Friday it had bought two of Micron Technology’s interests in Japan in deals worth up to $132 million, part of its efforts to expand its presence in Japanese chip technology.

** Chinese stadium builder Lander Sports said late on Sunday it was terminating plans to buy a stake in English soccer club Southampton, citing uncertain factors wrought by changes in China’s securities market and policies.

** U.S. private equity group Carlyle Group has gained full control of Italian fashion brand TWINSET by buying the remaining 10 percent stake from founder Simona Barbieri, who will step down as the affordable luxury label’s creative director.

** HNA Airport Holding Group Co Ltd is close to buying out the stake that engineering conglomerate Odebrecht SA has in Brazil’s second-busiest international airport, a person briefed on the matter said, partly solving an impasse with a government agency over licensing rights.

** Dynasty Financial Partners LLC, which provides back-end support services to independent wealth management firms, said it had added Next Capital Management to its network of investment advisors. (Compiled by Ahmed Farhatha and Divya Grover in Bengaluru) </s> In a previous article I outlined the beginning of my new fund focusing on undervalued volatile dividend stocks that have lucrative option premiums, which allows us to collect income while waiting out any short-term headwinds in strong companies. You can find a link to that article here and the first update here.

The Blackstone Group (BX) is trading at $40.19 a share, approaching 2014 highs of around $42 a share. The surge has been driven recently by the announcement that Blackstone will be restructuring from a Limited Partnership to a Corporation.

Despite the recent jump in share price, the stocks remains at fair value, representing an excellent opportunity for long-term investors to reap the rewards from investing in a fast-growing private equity giant with world-class management, a rock solid balance sheet, and a current yield near 6% based on last year's distributions.

The Blackstone Group is a multinational private equity, asset management and financial services firm founded in 1985 by Peter George Peterson and (current CEO) Stephen A. Schwarzman. Blackstone currently manages funds that invest across four primary segments; private equity, real estate, hedge funds, and credit.

When we evaluate any company we do so using three main categories:

The most obvious near-term growth catalyst for Blackstone comes from the recent restructuring announcement mentioned above.

According to Blackstone’s management, this change is expected to take effect July 1st 2019, after which BX will switch from paying a distribution requiring a K-1 form to paying a qualified dividend. After this switch institutional ownership will likely soar from its low current level of 39.79%.

By Blackstone’s estimates, 60% of the U.S. long-only and index fund/ETF market is restricted from owning partnerships. The demand that will be created for BX after the change will be huge, as financial sector ETFs and index funds start buying up the stock. This doesn’t include the increased demand by individual investors driven by the relative simplicity of tax accounting for qualified dividends compared to K-1 distributions.

While the restructuring should provide a strong boost to BX’s share price over both the short and medium-term, Blackstone also has several growth opportunities across its business segments.

Blackstone reported 2019 Q1 earnings April 18th , reporting total revenue growth of around 14.5%, from $1.77 billion in Q1 2018 to $2.02 billion this year. For the 12 months preceding this quarter, Blackstone reported a 1% increase in revenue compared to last year. This is impressive given the market meltdown during the second half of last year that hurt Blackstone’s incentive fee revenue as well as revenue from investments.

Blackstone also experienced a 14% increase in Assets Under Management (AUM) to $511.8 billion, with inflows of $42.9 billion for the quarter and $125.7 billion for the year.

Fee Related Earnings margins have also been steadily climbing from the last two years, with a current margin of 46.1%.

Blackstone currently syndicates and manages funds related to its four investment strategies: real estate, private equity, hedge fund solutions and credit.

Blackstone’s 2019 investment performance was strong, will all segments except hedge fund solutions and distressed credit returning double digits.

The real estate and private equity segments represent the majority of capital inflows, with around $84 billion of the prior 12 month’s $125.7 billion total.

In January, Blackstone announced a new platform for investments in fast-growing, mid-stage companies in the health care and financial services industries. The platform is being led by Jon Korngold, a former General Atlantic executive with almost two decades of experience in growth equity investments primarily in the fin-tech and healthcare sectors.

The idea behind the strategy is to invest in companies that still have plenty of growth potential without the risk typically associated with earlier-stage investments.

In January, Blackstone also announced the initiation of the largest real estate fund ever raised, at $20 billion. Some stated opportunities for this fund have been investments in distribution centers used by online retailers, investments in rental housing or investments in properties within cities populated with younger tech-oriented populations. With typical real estate leverage of 3 to 1, Blackstone will likely control $60 billion worth of buying power in the market.

For an idea of the sheer buying power this represents, consider that the value of all residential housing in Mississippi is estimated at $100 billion.

Blackstone continues to find creative ways to invest across asset classes and sectors, which should continue to fuel capital inflows and revenue growth for the long term.

With a credit rating of A+ and a stable outlook, Blackstone currently has the highest credit rating of any alternative asset management company. Combined with recurring revenue from advisory fees and a diversified portfolio of investments across nearly all asset classes, Blackstone’s balance sheet is rock-solid.

From a valuation perspective, Blackstone is currently trading at around 15.5 times the high estimates for next year’s earnings. An ideal purchase price would be below $35, but it is unlikely that the shares retreat to this level anytime soon given the recent restructuring announcement.

As stated previously, Blackstone’s “dividend” current exists in the form of partnership distributions. These distributions change every quarter and can go up or down depending on the profitability of Blackstone during that time period. For 2018, Blackstone paid out $2.42 for the year, which would equate to a yield of around 6% based on today’s share price. While 2019’s distributions are expected to be down from 2018, over the last 10 years the CAGR has been 17.23%.

With private equity remaining in favor and Blackstone continuing to increase its AUM, the company should have plenty of ability to continue increasing the dividend going forward. Combined with Blackstone's predictable fee-based business model, steadily increasing AUM and A+ credit rating, Blackstone represents a high-yielding "sleep well at night" investment that should be seriously considered by any income investor.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
The Blackstone Group, a multinational private equity and asset management firm, has agreed to buy Geo-Young, a wholesale drug distributor in South Korea, in a deal that will retain Geo-Young's CEO, Cho Sun-hae, in her leadership role.