GLOBAL - BlackRock has today secured the deal to buy Barclays Global Investors and its exchange-traded fund business iShares, making BlackRock the biggest asset manager in the world with over $2.7trn (€1.93trn) in assets under management.
A statement issued this morning confirmed BlackRock has won the race to buy both BGI and iShares for $6.6bn in cash and 37.8 million common and common equivalent shares, while Barclays will take a 19.9% economic interest in BlackRock as part of the deal.
The prospect of securing iShares could technically still fall through as Barclays has a "go shop" clause still active for another five days, which means CVC Capital Partners, the original bidder for iShares, could snatch the ETF business from BlackRock's grasp if they match or better its terms within that time.
If the deal completes in the fourth quarter of this year, Barclays will hold a 4.9% voting interest in BlackRock and Blake Grossman, chief executive of BGI, will join BlackRock as vice chairman of the combined firm and head of Scientific Investing. John Varley and Bob Diamond, respectively CEO and president of Barclays plc, will also join the Board.
Prior to this deal, BlackRock had AuM of $1.283trn at 31 March 2009, but will rocket to the top of the asset management market once the deal completes, in part thanks to 300bn in assets under management at iShares.
BlackRock said it will gain "unparalleled talent" through the merger and will remain "deeply committed to generating alpha as its number one priority for all actively-managed products, as well as delivering highly-efficient beta in passive strategies", though the plan is also to expand its relationship with Barclays in investment banking and wealth management.
BlackRock will be granted a 364-day revolving credit worth up to $2bn by banks including Barclays, Citi and Credit Suisse - the final two also being lead financial advisers in the deal - to help facilitate any capital raising transactions, and it has also received commitments from institutional investors to purchase 19.9 million shares worth $2.8bn when the transaction closes.