BlackRock Inc. announced Thursday it will buy Barclays Global Investors (BGI) for $13.5 billion, a deal that joins BGI's iShares ETF platform with BlackRock's mutual funds portfolio. The combined unit will create an asset management giant-the world's largest-with more than $2.7 trillion in assets, and will be called BlackRock Global Investors.
Barclays PLC, a London-based financial services company, previously entered into an agreement to sell BGI to the private-equity firm CVC under a "go shop" arrangement where it had 45 days to find a higher bidder. CVC has five business days to match BlackRock's offer. According to published reports, a person close to the company said it was unlikely to do so.
As part of the deal, Barclays will get a 19.9% interest in BlackRock Global Investors.
Like most major banks, Barclays got hammered during the global financial meltdown. The sale of its profitable iShares franchise to New York-based BlackRock will bolster its balance sheet, although analysts say it will produce a short-term earnings hit.