BlackRock will acquire Merrill Lynch Investment Managers from parent Merrill Lynch in exchange for an almost 50% stake in the combined company, BlackRock and Merrill Lynch announced this morning. The combined company will retain the BlackRock name and will have nearly $1 trillion in combined assets under management as a result of the "transformational deal that will enrich shareholders, clients and employees," Laurence D. Fink, chairman and CEO of the new company, said in a conference call this morning.
The deal will also create the largest fixed-income manager in the U.S. with a combined $415 billion, according to BlackRock. The companies manage a combined $286 billion in equity and balanced assets, $208 billion in liquidity, $38 billion in alternatives and real estate and $44 billion in retail separately managed accounts.
Mr. Fink will retain his previous title at BlackRock; and Ralph L. Schlosstein will remain as BlackRock president and a director. Robert C. Doll, president and CIO of MLIM, will become a vice chairman, CIO of global equities and chairman of BlackRock's private client operating committee. Mr. Doll and Robert Kapito, BlackRock's vice chairman and head of portfolio management, are both expected to become members of the new BlackRock's board of directors. Stan O'Neal, chairman and CEO of Merrill Lynch, and Gregory Fleming, Merrill's president of global markets and investment banking, are expected to represent Merrill Lynch on BlackRock'scompany's board of directors.
Also, Messrs. Doll and Schlosstein will oversee a steering committee which will be in charge of integrating the two firms.
PNC Financial, which has held a 70% stake in BlackRock, will have a 34% stake in the combined firm. Employees and public shareholders will hold the remaining 17%. The new entity will have a combined market capitalization of $18.8 billion, said Mr. Fink. BlackRock's market cap was at $9.3 billion as of yesterday, placing the value of MLIM at $9.5 billion.
Citigroup Corporate and Investment Banking served as the exclusive financial adviser on the deal, according to the companies.
The deal is expected to close in the third quarter.