Andre J. Peschong

There is an old saying in the deal business “It’s like trying to catch a falling knife”.  What that saying means is that you have a much higher percentage chance of getting hurt if you try and catch the knife as opposed to letting it fall.  That really sums up the Blackstone PHH transaction.  Basically, since the Blackstone’s IPO, which came out like a shot, their stock has slowly and methodically declined, almost mimicking the overall market indices.  I think that when the PHH deal was agreed to at $31.50 a share back in March of 2007 the mortgage market was not yet under fire.  A quantum shift has taken place in the mortgage/real estate market since that deal was agreed to and I think it was easier to pay the $50 million breakup fee (less $4.5 million which was paid back to Blackstone’s mortgage roll up group Pearl).  Regardless of the finger pointing this seems to be a classic case of buyers remorse based on a complete meltdown of the sub prime market.  Not even the mighty Blackstone could get economies of scale to make the deal work and thus without admitting or denying fault paid the breakup fee and is off to tend to its portfolio and hopefully its stock price.

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