BlackRock will pay $6.6bn in cash and the rest in stock for Barclays Global Investors, the New York-based company said today in a statement. Barclays will hold a 19.9 percent stake in the combined company. Financing will include $2.8bn from the sale of equity to institutional investors and as much as $2bn in loans from Barclays and other banks.
The purchase, the biggest of a fund manager, creates a company overseeing $2.7 trillion in assets, more than the Federal Reserve. BlackRock will add about $1 trillion in investments that track market indexes, which are attracting clients at the expense of funds whose managers choose securities to buy and sell. It’s the first top-ranked firm to attempt to combine both types of businesses.
“This will bring the greatest sweep of products to our clients,” Fink, BlackRock’s chairman and chief executive officer, said in a telephone interview. “This transaction is transformational.”