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Blackstone to Price IPO on Thursday, Earlier Than Expected

AP
Thursday, 21 Jun 2007 | 9:51 AM ET

Blackstone Group, which manages the world's second-largest private equity fund, will set the price of its much-anticipated initial public offering on Thursday--roughly a week earlier than expected.

The New York-based buyout shop, which controls names like Madame Tussauds wax museums and real estate company Equity Office Properties Trust, could become a public company on the New York Stock Exchange by the end of the week.

Blackstone originally planned to float a 12.3% stake in its management division the week of June 25, but underwriter Morgan Stanley confirmed the change on Tuesday. It did not disclose a reason why.

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There had been some concern that Blackstone Chief Executive Stephen Schwarzman would pull the offering due to potential changes in the tax laws. The firm warned investors last week a bill before Congress could reduce its earnings substantially in coming years.

Blackstone opposes efforts to tax it as a financial company rather than a partnership. But, if the proposed legislation in the Senate is passed, it would more than double the firm's taxes after a five-year grace period.

Blackstone, and other firms, have been able to take advantage of a two-decade old provision that allows investors in publicly traded partnerships to pay capital-gains taxes of 15 percent on their share of the firm's income. Corporations are currently taxed as much as 35 percent.

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Regardless of the tax hit in five years, though, this week's offering could transform the company into one with a market value of about $32 billion.

As the terms currently stand, the deal is expected to raise between $3.87 billion and $4.14 billion, with shares expected to price between $29 to $31. If the underwriters exercise their option for extra shares in full, the total IPO would be worth $4.75 billion.

Also holding major stakes in Blackstone will be China's government, which in May invested $3 billion in the buyout shop. The company's senior executives will hold more than 70 percent of the newly floated management division.

A spokesman for Blackstone would not comment. The company will trade with the ticker symbol "BX" on the NYSE.

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