Merger News: Blackrock Frontrunner For Barclays Asset Management Unit
With hopes held high that the M&A market will come booming back (although May was the worst single month in over 10 years – on a fee basis – for merger and acquisition activity, See Article), I think that it is a good time to start a Merger News category to compliment the general In the News category – what are your thoughts? Before anyone asks, I will not be covering every M&A deal in the market, or even anywhere close to every deal (I am but a single man after all). Instead, when I happen to spot an M&A deal that looks interesting, a deal that I think will be a good interview conversation piece, or one that I think will have a strong impact on the market, I’ll absolutely put a quick recap together for the site. If anyone knows of any deals that they think would be of interest to the rest of the readers, by all means shoot me an email with your recap, or just the parties involved and if it looks good, I’ll be sure to post it as well. Now, onto the deal at hand.
BlackRock Inc has both shown an interest in, and is the leading bidder to purchase, the asset management unit of Barclays Plc, Barclays Global Investors (“BGI”), for more than $10 billion. The talks are in the early stages, and there is no exclusivity agreement between Barclays and BlackRock at this point. In fact, the Bank of New York Mellon Corp has also expressed a potential interest in the asset management unit. A purchase by BlackRock would bring their total assets under management up to $2.81 trillion dollars, and help them to expand their presence outside of the U.S.
After passing on government assistance, and suffering nearly $19 billion in credit losses and writedowns, Barclays’ capital ratios lag behind those of RBS and Lloyds and, as such, Barclays needs to raise fresh capital. Barclays is rumored to be expecting around $12 billion for BGI, and may intend to hold a 20% stake in the unit post acquisition – if BlackRock, or any other firm for that matter, is willing to swallow that pill, then this would be the largest acquisition in the fund-management industry to date.
