Blackstone acquires Cendant and Michaels Stores synchronously

Blackstone, a private investment and advisory firm, on Friday appeared as the winning bidder in the multi-billion dollar auctions for New York-based Cendant's travel distribution business and Texas based Michaels Stores, the arts-and-crafts retailer.

The attainments, worth $ 4.3bn and $ 5.8bn respectively, highlight how aggressive the US private equity group Blackstone is becoming as it tries to spend the $ 14.5bn of funds it accumulated in its last fundraising cycle.

According to the sources familiar with the matter, an association equally split between Blackstone and Bain Capital was close to sealing a deal to buy Michaels Stores for $ 44 per share, or nearly $ 6bn, a 30% premium to the company's closing price before Michaels Stores' declaration on March 20 that it planned to pursue "strategic alternatives." Bain and Blackstone will own equal stakes in the company.

Blackstone founded in 1985 by Peter G. Peterson and Stephen A. Schwarzman is one of few investment firms, including Texas Pacific Group and Kohlberg Kravis Roberts that have come to dominate the US corporate landscape as they magnetize ever greater pools of capital which they spend in buying companies, loading up with debt, and selling them for a profit.

However, as interest rates ascend and financing becomes more expensive, the pressure may be creating on some of these firms to make investments more swiftly. On Friday itself, the New York City based Blackstone is believed to have parted with $ 2.5bn in equity.

Yesterday morning, Blackstone declared it was going to acquire the Cendant unit, which includes the Orbitz online travel site and the Galileo reservations system, in a deal worth $ 4.3bn in cash that capped a three-month long auction. Sources familiar with the terms of the deal informed Blackstone was signing an equity cheque for less than 20% of the purchase price, or more than $ 850m, to fund the deal.

In addition to the Cendant and Michaels deals, late on Friday, Blackstone also disclosed a smaller buy-out in the purchase of Encore Medical Corporation, an orthopedic devices company, which includes surgical implants, sports medicine equipment and products for orthopedic rehabilitation, pain management and physical therapy, for nearly $ 870m including debt. Encore shareholders will receive $ 6.55 in cash under the terms of the bargain, or equal to a 36% premium over the company's share price.