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Rating:Fink and Diamond First Explored a Deal Six Years Ago Not Rated 0.0 Email Routing List Email & Route  Print Print
Friday, June 12, 2009

Fink and Diamond First Explored a Deal Six Years Ago

by: Armie Margaret Lee

BlackRock CEO Larry Fink and Barclays president Robert Diamond first talked about a possible deal six or seven years ago, but the pair decided that the timing wasn't right, The New York Times reported.

Thursday night, BlackRock announced it was buying Barclays Global Investors in a cash and stock deal valued at $13.5 billion, a transaction that would create an asset management firm with $2.7 trillion of assets.

"This is a once in a lifetime opportunity to put two firms together that have 80 percent or 90 percent complements and very little redundancy," Fink was quoted in the Wall Street Journal as saying.

The combined firm, which will be named BlackRock Global Investors, will have a market value of more than $34 billion, and the transaction will add to per-share cash earnings by 10 percent in 2010, Bloomberg quoted Fink as saying in a conference call.

Bank of New York Mellon was reportedly the other main bidder for BGI, and according to Bloomberg, BlackRock won out in part because its stock price went up 36 percent this year, versus a gain of 2.2 percent in BNY Mellon's stock.

BlackRock is acquiring BGI in exchange for $6.6 billion in cash and 7.8 million shares of common and common equivalents in BlackRock.

A group of banks, including Barclays, Citi and Credit Suisse, has committed to provide BlackRock with a new 364-day revolving credit facility of up to $2 billion. BlackRock also received commitments from institutional investors to buy 19.9 million shares.

The Financial Times reported that those investors would include the Kuwait Investment Authority, Government of Singapore Investment Corporation and and China Investment Corporation.  

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