BlackRock Inc. announced June 11 that it will acquire Barclays Global Investors for $6.6 billion in cash and 37.8 million shares of BlackRock common stock and equivalents, creating by far the largest asset management firm in the world--BlackRock Global Investors--with $2.7 trillion in assets under management--in a deal that the companies said is expected to close in the fourth quarter of this year. At current market prices, the entire deal is valued at $13.5 billion.
The combination of BlackRock's mutual funds with Barclays Global's iShares ETF platform will give the new firm preeminence in both active and passive investing strategies for retail investors and advisors, serving clients in more than 60 countries through 9,000 employees in 24 countries. After the acquisition closes, BGI parent Barclays PLC will retain a 19.9% stake in BlackRock Global Investors.
In the most recent ETF Snapshot released June 10 by Barclays ETF competitor State Street Global, Barclays had 49.5% of the total U.S. ETF market, with $290 billion in 180 ETFs; as of May 31, there were 728 ETFs in the U.S. managed by 24 firms, with total assets of $587 billion. This year, ETF assets are up 10% compared to 4% for the overall U.S. stock market, and were up 10.6%, or 10.6%, in the month of May alone.
BlackRock Chairman and CEO Laurence Fink announced that Blake Grossman, CEO of BGI, will serve as vice chairman of the combined firm, which he said will "enhance our ability to offer comprehensive solutions and tailored portfolios to institutional and retail clients," particularly in investment banking and wealth management, with a "greater focus on asset allocation, multi-asset class solutions, fiduciary management, risk management and advisory services." John Varley, Barclays group CEO, and Bob Diamond, president of Barclays PLC, will also join BlackRock's board.
In a conference call on June 12, Fink said that BlackRock can "now bring a comprehensive solution to our retail clients, providing both solutions in the mutual-fund space and in the ETF space."