Barclays has received a binding offer from BlackRock for the purchase of the Barclays Global Investors business (BGI) for consideration of approximately $13.5 billion.
As part of the consideration offered, Barclays would receive 37.784 million new BlackRock shares giving it an economic interest of approximately 19.9% of the enlarged BlackRock Group, which would be renamed BlackRock Global Investors. The remainder of the consideration of $6.6 billion would be paid by BlackRock in cash.
The proposed transaction offers significant value for Barclays shareholders. The consideration of $13.5 billion represents a multiple of 11.9x and 8.3x BGI’s 2008 EBITDA as published and as sold, respectively. BlackRock Global Investors would be a major provider of investment management services with pro-forma assets under management of approximately $2.8 trillion. Barclays would extend its ability to meet the sophisticated investment needs of its existing and future clients and customers by accessing the enhanced investment platform and capabilities of BlackRock Global Investors. Barclays would also gain access through BlackRock to new channels and customers for Barclays products and advisory services, offering new revenue opportunities.
John Varley, Chief Executive, Barclays Group, said: “The combination of BGI and BlackRock represents a unique strategic opportunity to bring together the complementary capabilities and geographical footprints of two leading asset managers. The asset management industry is fragmented; in such circumstances the economies of scale created by a combination with this breadth of business offer considerable growth to shareholders over time.”
The Barclays Board has determined that the BlackRock offer constitutes a superior offer to the transaction agreed with Blue Sparkle, the CVC Capital Partners Group SICAV-FIS S.A. vehicle formed in relation to its proposed purchase of the iShares business. Unless Barclays receives an offer from CVC by the end of Thursday 18 June 2009 (New York time), which it considers to match the BlackRock Offer, the Barclays Board will accept the BlackRock Offer and recommend it to Barclays shareholders for approval.
