Blackstone Wins Advisory Role on AIG Bailout

(Reuters) – Blackstone Group LP (BX.N) said on Wednesday it won the role of adviser on the emergency $85 billion rescue of insurance company American International Group Inc (AIG.N), a marquee assignment as the private equity firm works to expand its U.S. advisory team.

Blackstone had worked with AIG through the weekend to explore options and stave off bankruptcy. The efforts resulted in the emergency rescue by U.S. authorities who wanted to prevent the giant insurer from collapsing and deepening the global financial crisis.

The deal came just a week after Blackstone said the limit on bank financing for leveraged buyouts was about $5 billion.

Much has changed over the past week in the financial markets — with the bankruptcy filing by U.S. investment bank Lehman Brothers Holding Inc (LEH.P) the agreement by Bank of America Corp (BAC.N) to buy Merrill Lynch & Co Inc (MER.N) and a reported deal for Britain’s Lloyds TSB (LLOY.L) to take over rival HBOS Plc (HBOS.L).

Blackstone’s team on AIG included John Studzinski, Martin Alderson Smith, Larry Nath, Tom Stoddard, and Art Newman.

The private equity company has been working to expand its U.S. advisory business, and earlier this month said it would open an office in technology-concentrated area of Menlo Park, California.

Blackstone, which went public last year just before the credit crisis, has won several high-profile and diverse advisory assignments — Kraft’s sale of Post cereals, the merger of Suez and Gaz de France, and Microsoft Corp’s (MSFT.O) unsolicited offer for Yahoo Inc (YHOO.O).

AIG could not be reached immediately for comment.

Shares of Blackstone closed down 9.5 percent to $15 Wednesday on the New York Stock Exchange. The 52-week high is $29.75, set on October 2007. (Reporting by Jessica Hall in Philadelphia, and Lilla Zuill and Megan Davies in New York; editing by Jeffrey Benkoe)