After weeks of speculation, BlackRock, the giant US money manager, has announced it will buy Barclays Global Investors (BGI) for $13.5 billion (£8.2 billion) in a deal that will make it the world’s biggest asset manager.
The sale, which also includes the iShares business, will more than double BlackRock’s assets to about $2.7 trillion and give the company, well-known for working with institutions and governments, access to fast-growing exchange-traded funds and retail investors.
BlackRock will pay $6.6 billion in cash and the remainder in stock to acquire the unit. Bob Diamond, Barclays’ president, will receive about $36 million for his shares and options in BGI and will sit on the new company’s board of directors.
Laurence Fink, BlackRock’s chief executive, said the deal was “a transformational transaction” in the investment management industry, and would allow his business to offer both active and passively managed investment portfolios.
Mr Fink said the combined companies’ market capitalisation would be about $34 billion.
Advertisement
BGI, which ranks as Europe’s largest hedge fund manager and operates in 15 countries, was long considered a top prize in the industry, and BlackRock beat out rivals, including Bank of New York Mellon, to win it.
The deal includes BGI’s iShares division, which Barclays had previously agreed to sell to CVC Capital Partners for $4.4 billion. CVC now has five business days to match BlackRock’s terms or walk away from the deal.
BlackRock, a 21-year-old business with deep roots in the mortgage market, has grown into a powerhouse through acquisitions including its 2006 deal to buy Merrill Lynch’s asset management operations for $8.6 billion.
Barclays will own a stake of about 20 per cent in BlackRock, and the two businesses will seek to expand their relationships in investment banking and wealth management.
Mr Fink said BlackRock has received commitments from a global network of institutional investors and clients to purchase 19.9 million shares at the close of the transaction for a total of $2.8 billion.