The world of finance is on the lookout. Blackstone has officially announced its change in legal status from a publicly traded partnership to a joint-stock company. This will considerably facilitate its development by opening up to new shareholders with minority interests.
Effective July 1, this transformation is a historic change for the New York based firm at the head of a global empire. The empire consists of G6 Hospitality (Motel 6 et Motels Studio 6), Strategic Hotels & Resorts (acquired in 2016), Cosmopolitan of Las Vegas, Merlin Entertainments (principal rival of Disney on an international scale, with Legoland, The Tussauds Group, Gardaland Hotel, etc.), and SeaWorld Parks & Entertainment, and previously Hilton hotels (a group from which it announced progressive divestment in May 2018). As for the hotel industry stricto sensu, as of March 31, 2019 Blackstone claims 151,000 keys worldwide, with multiple shareholdings alongside it, allowing it to be the leading owner of hotel assets in Spain, for example.
Stephen A. Schwarzman, Blackstone Chairman, CEO and Co-Founder, explains this change that was announced a few months ago:
Our conversion to a corporation is an exciting next step for Blackstone, which we believe will make it much easier for both domestic and international investors to own our stock. We’re pleased that many more shareholders can now join us as we’re poised for continued growth and innovation in the years ahead. We’ve been encouraged by the strongly positive feedback we’ve received since the announcement and believe the conversion will unlock significant value for our shareholders over time.
Following this statement, shares of the listed company climbed 4.9% on Monday, the launch day of this transformation. Indeed, future prospects are very positive, for both the firm's former and future investors. Blackstone has changed the management of its capital from closed to open. This means that investors will no longer need the agreement of all shareholders to be able to buy or sell their shares. This change in status induces a desire to diversify owners in its capital, by fragmenting ownership, following the Anglo-Saxon model of a company with dispersed capital. The latter thus becomes floating, bringing the shares more liquidity, making it possible to accelerate its development over the next few years.
This transition took time to materialize, although Blackstone had a size that was conducive to this status. It had developed to this size over the years since it was founded in 1985. Until now, it has enjoyed the status of a publicly traded partnership, thus enjoying a lower tax rate in the United States than that imposed on joint stock corporations. This explains why the transition to this legal status had been postponed until now. Yet a change occurred in 2017: American tax law reduced corporate income tax from 35% to 21%. With the financial hesitation removed, the group was able to begin its long-awaited transformation of status.
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