The BlackRock Inc.-Barclays Global Investors deal might rank as the worst-kept secret in money management, but the acquisition announced late on June 11 rocked the industry, creating the world's largest investment firm.
Citing BlackRock's track record in digesting previous acquisitions, fans of Chairman and CEO Laurence D. Fink argue that BlackRock is uniquely positioned to pull off the biggest money management integration in history.
Detractors, however, see a buyer not content to leave well enough alone that could disrupt one of money management's most successful investment cultures.
The deal — which calls for London-based Barclays PLC to sell BGI for $13.5 billion in cash and BlackRock stock — is unprecedented in terms of scale and scope. (CVC Partners, the private equity firm that had previously agreed to buy BGI's iShares business for just under $4.5 billion, has five business days to top BlackRock's offer for all of BGI, but Mr. Fink expressed confidence his firm's bid would prevail.)
BlackRock, best known until now as one-third of the industry's fixed-income “oligopoly,” would in one fell swoop become the industry's unchallenged 800-pound gorilla, with more than $2.7 trillion in client assets, including an industry-leading $300 billion in exchange-traded-funds.
The latest in a string of sizable acquisitions by BlackRock fulfills Mr. Fink's goal of making his firm a “supermarket,” offering a full complement of investment strategies, noted an executive with another money management firm, who declined to be named.
Executives at both firms said they had talked about a possible deal six or seven years ago, but the timing wasn't right.
In a June 12 conference call, Mr. Fink said a bulge-bracket BlackRock Global Investors, with its sweep of products, would be able to meet the needs of institutional clients increasingly looking for “fewer managers, and more comprehensive relationships.”
He cited as an example a $10 billion allocation BlackRock won that covers a range of credit and equity investments.
He also said the firm is competing for two new allocations of $18 billion and $20 billion.