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Mega-Marriage of BlackRock and BGI Is Largest Deal in Money-Management History

Posted on 12 Jun 2009

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BlackRock Inc has reached an agreement to acquire Barclays Global Investors for $13.6 billion -- the largest deal in the history of the money-management industry.

"What we saw in BGI was the best indexing and scientific investing platform in the world, and the leading [exchange traded funds] provider in the world," Laurence D. Fink, chairman and chief executive officer of New York-based BlackRock, said in a conference call this morning.

Combining the two firms, he added, will create "the most differentiated financial institution in the world."

If the deal is ultimately approved, the mega-marriage would combine two of the largest managers in the world to form a new $2.7 trillion asset management company that will be known as BlackRock Global Investors.

Before reaching an agreement with BlackRock last night, Barclay's had inked a deal earlier this year to sell its ETF powerhouse iShares to CVC Capital Partners for $4.4 billion.

Mr. Fink said this morning that CVC has five days to match the terms of BlackRock's offer.

While the vast majority of the combined BlackRock and BGI assets will be institutional, he noted this morning that it will also boast $526 billion in retail assets, making it one of the largest retail money managers in the world as well.

In this marketplace, that the combination of BlackRock's active mutual funds with iShares' ETFs gives the firm a more comprehensive retail platform, and "dramatically" changes its offerings for financial advisers and individual investors, Mr. Fink said.