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Blackstone, Vampire Squid Sucking Life From SeaWorld: Street Whispers

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NEW YORK ( TheStreet) -- The Blackstone Group (BX) and Goldman Sachs (GS) ' proposed initial public offering of SeaWorld stinks like a rotting whale carcass, but that isn't necessarily news.

Still, the deal deserves our attention if only for the likely futile hope that such scrutiny will counter the secret strategy of Wall Street takeover sharks: bore the world to death while quietly raking in all the $400 stone crabs on the planet.

While Blackstone is apparently the main owner of SeaWorld, someone with a sense of humor at Goldman Sachs decided the infamous vampire squid also ought to have a stake. The size of the stake isn't specified. A Goldman spokeswoman declined to comment.

Blackstone bought SeaWorld from Anheuser-Busch(BUD) in 2009. Since then, it has increased the company's debt load to pay itself two dividends worth a total of $610 million. Blackstone also purchased more than $100 million in SeaWorld debt. Some of the proceeds of the IPO will be used to pay Blackstone an unspecified fee.

Blackstone will retain control over SeaWorld after the IPO, which is a good thing for Blackstone, since it will allow the buyout firm to continue receiving all sorts of kickbacks from the company.

Take Equity Healthcare, for example, a sort of middleman among middlemen affiliated with Blackstone. SeaWorld's prospectus states that Equity Healthcare, which it contracted at the start of the year, "provides to us certain negotiating, monitoring and other services in connection with our health benefit plans. Because of the combined purchasing power of its client participants, Equity Healthcare is able to negotiate pricing terms for providers that are believed to be more favorable than the companies could obtain for themselves on an individual basis."

That doesn't sound too different from the pitch originally made by health insurers: that they help companies keep medical costs down by exerting leverage over doctors. But now it seems Blackstone's companies need someone to police the police. Meanwhile, it charges SeaWorld $2.50 per employee per month for the 8,400 employees who participate in the plan, which will rise to $2.60 in 2013 and $2.70 in 2014.

Another Blackstone affiliate called Core Trust Purchasing Group (CPG) "secures from vendors pricing terms for goods and services that are believed to be more favorable than participants in the group purchasing organization could obtain for themselves on an individual basis," according to the prospectus.

CPG, which has a five-year deal with SeaWorld, gets a commission from vendors for the purchases made by SeaWorld, and then Blackstone appears to get another, separate cut, though the language in the prospectus isn't very clear on this point.

Blackstone touts both Equity Healthcare and CPG on its website as part of its Portfolio Operations Group , implying that SeaWorld's deals with these companies isn't in any way unique. Presumably, many of the companies owned by Blackstone have similar arrangements. That's the whole point: that Blackstone and all the companies it runs with its more than $200 billion under management is a more effective negotiator than SeaWorld would be by itself. But where do Blackstone's allegiances lie: with maximizing the profitability of SeaWorld or sucking as much money as it can out of the company as quietly as it can? Blackstone spokespeople didn't immediately respond to a request for comment.