DILUTION FOR B OF A, PNC
San Francisco-based BGI's $1.5 trillion in assets will give BlackRock $2.8 trillion in assets under management, catapulting it to a dominant position with twice the assets of nearest rival State Street.
BlackRock was able to pay for the deal in part because its shares have performed relatively well recently. The company's shares are up 36 percent so far this year through Thursday's close, roughly double the increase for the overall sector as measured by the Dow Jones US Asset Managers Index.
BlackRock, which pays a $3.12 annual dividend, will review its dividend policy once it closes on the deal and has paid off short-term credit facilities, CEO Fink said on a call.
Barclays has agreed not to sell any of its BlackRock shares in the first year without the asset manager's consent, and no more than half its holding in the second year.
Barclays Chief Executive John Varley and Barclays President Bob Diamond will each get a seat on BlackRock's board.
Diamond will receive a net consideration of $36 million before any deductions from shares he holds in BGI. He will have paid $10 million to acquire the shares since 2003, Barclays said.
Other BGI staff are in line for a windfall from a lucrative employee share ownership plan. If they exercise options, staff will own 9 percent of BGI.
Barclays was advised by its investment banking unit, Barclays Capital, and Lazard. JPMorgan Cazenove served as Broker and sponsor to Barclays. Citigroup and Credit Suisse were lead advisors to BlackRock.