BlackRock to buy Barclays’ Global Investors arm

Larry Fink’s asset management firm will be acquiring Barclays’ PLC’s Global Investors’ business, which also carries with it the investment banks iShares, the biggest player in the still growing ETF market owning 50% of the market share.  At a price of $13.5bn, BlackRock’s acquisition will give it $2.7 trillion in assets under management, already higher than the Fed’s total assets of $2.13 trillion.

blackrockFrom WSJ:

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 bank’s president, Bob Diamond still does not know where the money will be invested on after the transaction is completed.

bgiThe two executives appeared on Bloomberg TV today in New York to talk about the deal. Some of the remarks that were made included:

  • Financial armageddon is now behind us
  • The acquisition of BGI is a way of increasing the services offered by asset management firm BlackRock to its clients; it’s not about the size.
  • The sale of BGI is not about capital. It’s being in a strategic position.
  • BGI was bought for $450million and is not being sold for $13.5bn. It’s a great financial transaction.
  • Even with such an amount of money, there’s no rush to do anything.
  • Barclays’ ambition is to be in the top 3 investment banks.
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