Goldman to Divest Fujita Corp. - Analyst Blog
August 13 2012 - 1:32PM
Zacks
The Goldman Sachs Group Inc. (GS) is selling
Fujita Corp. to Daiwa House Industry, according to a Reuters
report. The deal comes on the heels of Goldman’s departure from its
investments in Japan.
The deal penned with Daiwa, a Japanese home builder, will fetch
Goldman 50 billion yen ($636 million). It had acquired Fujita in
2008 with investments of 45 billion yen that were made in two
phases.
Following the burst of the bubble economy in Japan in the early
1990s, a number of foreign investors had forayed in the country
with Goldman being one of the most aggressive. In particular,
distressed companies were targeted and their businesses were turned
over. This helped Goldman achieve capital gains.
However, lately the company is disposing those assets, partly or
completely, and roping in millions. Last year, Goldman offloaded
45% of its stake in Accordia Golf, a golf course management
company. It had invested in the company way back in 2002 and took
it public in 2006.
Currently, it is left with two chief investments in Japan
including USJ Co. that runs Universal Studios Japan in Osaka. The
company also has a stake in a mobile phone operator named
eAccess.
Concurrent with the second quarter 2012 earnings release,
Goldman announced the divestment of Goldman Sachs Administration
Services, a leading hedge fund administrator to State
Street Corporation (STT). The cash deal was valued at $550
million, subject to certain adjustments. The deal is anticipated to
close early in the fourth quarter of 2012.
Over the long haul, we believe that Goldman’s fundamentals
remain highly promising with a diverse business model and a strong
balance sheet. Strategic sales would also rope in billions and help
increase its financial flexibility. From the risk perspective as
well, it is assured that the company would be able to withstand
another financial crisis as Goldman cleared the severest stress
test.
Goldman currently retains its Zacks #3 Rank, which translates
into a short-term Hold rating. Considering the fundamentals, we
also maintain a ‘Neutral’ recommendation on the stock.
GOLDMAN SACHS (GS): Free Stock Analysis Report
STATE ST CORP (STT): Free Stock Analysis Report
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