Barclays accepts BlackRock offer for BGI (AP)
Tue, 16 Jun 2009 18:26:43 Etc/GM
BlackRock Inc. said last week it would purchase BGI from Barclays PLC using a combination of cash and stock, a deal which makes it the world's largest asset manager.
Barclays originally had planned to sell a highly profitable unit of BGI -- San Francisco-based iShares -- to CVC Capital Partners for $4.4 billion. But under a "go shop" clause in the agreement, Barclays had the option of hunting for a better offer.
Barclays said it would pay CVC a break up fee of $175 million for the scuppered deal.
In announcing the deal last week, BlackRock said the merger would allow it to marry its global mutual funds to iShares' exchange-traded fund platform.
Barclays' sale of BGI is part of its effort to raise capital after it declined to take part in a multibillion-pound (-dollar) bailout of the struggling British banking system last year alongside Lloyds Group and Royal Bank of Scotland. The bank instead raised billions from Middle Eastern investors and agreed to sell iShares. After passing a "stress test" of its assets by regulators, the bank also chose not to participate in the government's insurance plan which would underwrite potential losses on toxic assets.
The deal gives Barclays a 19.9 percent stake in the new BlackRock Global Investors, representing a 4.9 percent voting interest. There will be certain restrictions on Barclays buying or selling BlackRock shares, but the British bank will have the right to maintain its ownership percentage if BlackRock issues additional shares in the future.
source: http://biz.yahoo.com/ap/090616/eu_britain_barclays_blackrock.html?.v=2