As part of the mergers and acquisitions trend ongoing in the financial industry, a new juggernaut has emerged with BlackRock announcing that it has executed a purchase agreement to acquire Barclays Global Investors (BGI), including its ETF platform iShares from Barclays PLC. The new firm, to be named BlackRock Global Investors, combines market leaders in active and index strategies and subsequently makes the US money manager the biggest in the world with over US$2.7 trillion in assets under management.
iShares currently leads the industry as an ETF platform, with over US$300 billion in AUM in more than 350 funds across the globe. It has ranked among the top three selling mutual fund and ETF families for the last three years.
Under the terms of the transaction, BlackRock will acquire BGI in exchange for 37.8 million shares of common and common equivalents in BlackRock and US$6.6 billion in cash. The shares represent a 4.9% voting interest and an aggregate 19.9% economic interest in the combined firm.
Together, BlackRock Global Investors will have product offering across the risk spectrum to bring an even greater solutions-centred approach to both its retail and institutional clients. According to BlackRock, BGIs record of product innovation, risk analytics and leadership in quantitative investing, indexing, and retirement solutions will complement BlackRocks expertise in active fund management, tailored solutions, innovative culture and risk management via BlackRock Solutions.
The firms products will include equities, fixed income, cash management and alternatives, and will offer clients diversified access to global markets through separate accounts, ETFs, mutual funds, hedge funds, common trust funds and closed-end funds.
We have long held BGI in the highest regard, and know that our cultures and values are strongly aligned, remarks Laurence Fink, chairman and CEO of BlackRock. Both of our organisations place great emphasis on teamwork, excellence and integrity. The two firms have worked together for over seven years through BlackRock Solutions, where BGIs US fixed income group is already a client. This relationship will considerably ease integration as we go forward.’
Robert Diamond, president of Barclays, adds: ‘This relationship offers the opportunity to form a closer relationship between our investment banking and wealth management business and BlackRock. The strength and breadth of BlackRock’s combined platform will deepen our collaboration in serving clients worldwide.’
By Rhandell Rubio
