THE BASIS POINT

Blackrock + BGI = World’s Largest Money Manager

 

From the Wall Street Journal:

BlackRock Inc. reached an agreement to buy Barclays Global Investors from Barclays PLC for $13.5 billion, creating a money-management titan roughly twice the size of its closest competitor.

The firm, renamed BlackRock Global Investors, will have more than $2.7 trillion in assets under management. The deal makes BlackRock, already a major player in actively managed stock, bond and alternative-investment products, an indexing giant and the largest U.S. provider of exchange-traded funds.

The transaction, expected to close in the fourth quarter, gives the British bank a 19.9% stake in BlackRock. Barclays President Robert E. Diamond and Chief Executive John Varley would take seats on BlackRock’s board. BlackRock is acquiring BGI in exchange for 37.8 million shares of common stock and equivalents and $6.6 billion in cash.

The deal more than doubles the assets under management for BlackRock, which was already one of the world’s largest money managers. The company had assets under management of $1.28 trillion at the end of the first quarter, down 6% from a year earlier.
More

Though asset-management industry mergers often have disappointing results, BlackRock may be one of the few firms positioned to make such a large acquisition a success, industry observers say. BlackRock, founded in 1988 by Mr. Fink, has proven adept at deals, merging with Merrill Lynch Investment Managers in 2006 in a move that more than doubled its assets under management.

BlackRock managed to emerge from the financial crisis in a clear position of strength. Managing stock, bond, alternative investment, and cash-management products, the firm was largely able to hang on to investor assets even as shareholders jumped from riskier holdings to more conservative investments.

BGI, based in San Francisco, is known largely for its index-tracking products. The firm created the first index fund for institutional investors in 1971, and most of its roughly $1.5 trillion in assets under management are in indexed products.

 

WANT TO OUTSMART YOUR FRIENDS?

GET OUR NEWSLETTER

Comments [ 0 ]

WHAT DID WE MISS? COMMENT BELOW.

All comments reviewed before publishing.

12 + 1 =

x