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BlackRock To Acquire State Street Research, Consolidate Funds

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Aug. 26, 2004 — BlackRock Inc. (BLK) agreed to purchase SSRM Holdings Inc, the holding company of State Street Research & Management Company and SSR Realty Advisors Inc., from MetLife Inc. (MET) for $375 million in cash and stock.

In a conference call this morning, BlackRock’s chairman and CEO, Laurence D. Fink said that State Street Research’s funds will likely be “consolidated” under the BlackRock brand name.

“This is a great fit for BlackRock,” said Burton Greenwald, a Philadelphia-based mutual fund consultant. “BlackRock has been primarily managing equity assets and now they are acquiring predominantly fixed-income assets from State Street. There is no question that BlackRock has the resources to successfully run both equity and bond products.”

Greenwald also noted that State Street’s brand name may have been “somewhat diminished” under the ownership of a vast insurance company like MetLife. “MetLife never really got its arms around State Street,” he said. “I think there was a cultural clash between MetLife and the investment management group at State Street. Long-term, MetLife really did not need State Street.”

Under the terms of the deal, MetLife will receive $325 million in cash and BlackRock stock valued at $50 million. Additional cash consideration, which could increase the purchase price by up to 25%, may be paid over 5 years contingent on certain measures.

As of July 31, 2004, BlackRock had $314 billion of assets under management, including the BlackRock mutual fund family. As of June 30, 2004, SSRM Holdings, together with SSR Realty Advisors, had $52 billion in assets under management, including $26 billion in fixed income, $20 billion in equity, and $6 billion in real estate. These assets include the State Street Research fund family.

BlackRock noted that the combination of SSRM Funds and BlackRock Funds will constitute the 17th largest broker-distributed fund family in the U.S. with more than $26 billion of assets under management.

BlackRock is majority owned by PNC Financial Services Group (PNC).

The transaction is expected to close in early 2005, subject to fund shareholder approvals, among other things.


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