The Zacks Analyst Blog Highlights: Blackstone Group, Goldman Sachs Group, Bank of America, Citigroup and Hershey

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Sep 20, 2012, 09:30 ET

CHICAGO, Sept. 20, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include The Blackstone Group LP (NYSE:BX), The Goldman Sachs Group, Inc. (NYSE:GS), Bank of America Corporation (NYSE:BAC), Citigroup Inc. (NYSE:C) and The Hershey Company (NYSE:HSY).

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Here are highlights from Wednesday's Analyst Blog:

Blackstone to Buy Vivint for $2B

The Blackstone Group LP (NYSE:BX) has agreed to buy Vivint Inc – a security provider, which offers home automation and technology services – for a sum of about $2 billion. The deal is anticipated to conclude by the end of the current year.

According to Reuters, Vivint was looking for buyers and had short-listed Blackstone, Ares Management LLC and GTCR LLC for this purpose. Finally, Blackstone ran past others and grabbed the opportunity. However, the official word on these developments is still awaited.

Blackstone will be acquiring Vivint from its current sponsors – including The Goldman Sachs Group, Inc. (NYSE:GS), Jupiter Partners and Peterson Partners – with Vivint's management giving up a considerable part of their ownership holdings. After the deal is closed, Blackstone will own majority of the stake in the company.

Merrill Lynch – a wing of Bank of America Corporation (NYSE:BAC) – and Citigroup Inc. (NYSE:C) will manage the sale process. These firms valued the company at more than 10 times its earnings before interest, taxes, depreciation and amortization (EBITDA).

As per an executive at Blackstone, Vivint's scalability and presence in an array of segments were the primary considerations for the acquisition bid. In addition to this, such companies are attractive to private equity firms mainly due to the stable subscriber fees charged from the customers, which can contribute towards servicing the debt taken on during an acquisition.

Moreover, this acquisition will help Blackstone tap into the attractive growth trajectory of Vivint. Blackstone is expected to provide capital to fund an expansion of Vivint's services, its marketing potential to allure more clients and its access in foreign markets. As a result, Blackstone's top line will definitely get a boost in the future.

However, one thing that draws our maximum attention is the massive number of consumer complaints that Vivint has received in the last three years and the resultant legal settlements it had to face. Considering this fact, it can be assumed that the acquisition may hurt the reputation of Blackstone to some extent.

The shares of Blackstone currently retain a Zacks #4 Rank, which translates into a short-term Sell rating.

Hershey Opens Modern Plant in PA

The Hershey Company (NYSE:HSY) announced the opening of its most technologically advanced manufacturing unit in Hershey, Pennsylvania. Hershey has made an investment of $300 million for setting up the facility, one of its biggest investments to date. Construction of this manufacturing unit began in September 2010 and was completed, as per schedule, in early 2012.

The 340,000 square-foot West Hershey unit is one of the company's eight manufacturing plants in the U.S. The new facility will produce chocolate brands like Hershey's Bars, Hershey's Kisses Chocolates, Rolo Candies and Hershey's Syrup. This investment positions Hershey well for global growth over the next century.

In order to ensure future profit, Hershey intends to increase its global presence. This implies that it needs to increase its production scale in order to cater to the increase in demand that would eventually come with the expansion in global market share.

Also, product innovation has always been an important growth strategy for the company. The new facility offers a strong infrastructural base to support future product lines.

The new manufacturing facility will cater to the growing demand for Hershey's chocolates. The company expects to speed up production and carry on product innovation without compromising on quality. The manufacturing plant features an advanced Information Technology system, which includes highly automated real-time diagnostics systems, thus making it more efficient and capable of continuing operations 24 hours a day.

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