Blackstone to Acquire GSO Capital, Buy Back Shares

Private equity firm Blackstone Group said Thursday it would acquire GSO Capital Partners , a hedge fund firm that sold a stake to Merrill Lynch last May, and also announced a $500 million stock buyback plan.

GSO specializes in leveraged finance and manages about $10 billion of assets. It manages a multi-strategy credit hedge fund, a mezzanine fund, a senior debt fund and collateralized loan vehicles (CLOs).

Combining GSO's operations with Blackstone's corporate debt investing business will leave Blackstone managing more than $21 billion of assets. Chief Executive Stephen Schwarzman said dislocation in the credit markets makes this "an ideal time" to expand this business.