Barclays sells BGI stake to BlackRock for $13.5 bn
British bank Barclays confirmed that it had agreed to sell its BGI investment arm to US firm BlackRock for $13.5 billion, creating the world's biggest asset manager.india Updated: Jun 12, 2009 23:54 IST
British bank Barclays confirmed on Friday that it had agreed to sell its BGI investment arm to US firm BlackRock for $13.5 billion, creating the world's biggest asset manager.
The cash and shares deal for Barclays Global Investors (BGI), unveiled in the US late on Thursday, will see Barclays take a 19.9 per cent stake and two seats on the board of the enlarged group, to be called BlackRock Global Investors.
BlackRock is paying $6.6 billion in cash and the rest in stock and said it is raising $2.8 billion from the sale of 19.9 million shares to a group of unnamed insititutional investors.
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.
The bank's Chief Executive John Varley and 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.
For Barclays the deal will strengthen its balance sheet after the bank refused aid from the British goverrnment that some of its rivals accepted as the global financial crisis engulfed the industry.
Barclays said in a statement that a net gain of $8.8 billion would be used to bolster its capital strength, boosting its core Tier 1 capital adequacy ratio by 1.5 percentage points. It also said its trading performance up to the end of May had been "generally consistent" with trends reported at the time of its interim statement on May 7.