BlackRock announced it has executed a purchase agreement to acquire Barclays Global Investors (BGI) including the iShares exchanged-traded funds unit in a US$13.5 billion deal.
Under the terms of the transaction, BlackRock would acquire BGI in exchange for 37.8 million shares of common and common equivalents in BlackRock and US$6.6 billion of cash.
"The combination of BlackRock and BGI would bring together market leaders in active and index strategies to create the pre-eminent asset management firm operating under the name BlackRock Global Investors (BlackRock)," BlackRock said.
"The transaction would create an independent and fully integrated asset management firm with combined assets under management of over [US$2.7 trillion]."
BGI's current owner, British bank Barclays Plc previously entered into an agreement to sell BGI's iShares unit to buyout firm CVC Capital Partners for US$4.4 billion in April.
However, a so-called 'go-shop' provision allowed Barclays to solicit better offers from other firms until June 19.
"Unless Barclays receives an offer from that party within five business days that considers to match the terms of BlackRock's agreement to acquire BGI, the Board of Directors of Barclays will execute the purchase agreement with BlackRock and recommend it to Barclays' shareholders for approval," BlackRock said.
"At the closing of this transaction, which is expected to occur in the fourth quarter, Barclays will hold a 19.9 per cent economic interest in BlackRock. The two firms will seek to expand their relationships in investment banking and wealth management.
"At closing, BlackRock will have more than 9,000 employees in 24 countries and have a meaningful presence in all major markets around the world. The addition of the BGI San Francisco office will substantially expand the firm's US footprint."
