BlackRock on Wednesday announced that two major shareholders — Bank of America and PNC Financial Services Group — will reduce their stakes in the money management giant through a secondary offering of 42 million shares of its common stock.
The offering, led by investment banking arm BofA Merrill Lynch and Morgan Stanley, will be conducted over the coming five days.
Bank of America, through wholly owned subsidiary Merrill Lynch, will offer 34.5 million shares of BlackRock’s common stock, with the remaining 7.5 million shares coming from PNC Financial. A third major shareholder, Barclays, isn’t participating in the offering, according to a BlackRock news release.
Following the offering, Bank of America’s stake in the company will fall to 15.9% from 33.9%, or to 12.6% should the underwriters tap an additional 6.3 million shares Bank of America is ready to provide to cover any overallotments. PNC’s stake will slip to 20.3% from 24.3%, while Barclay’s stake will remain at 19.7%.
Sell-side analysts welcomed the move. In research notes issued Wednesday, Nomura analyst Deborah Altman and Deutsche Bank analyst Michael Carrier both said the offering, while it could weigh on BlackRock’s share price in the short term, removes a potential overhang of selling pressure even as signs of growing business momentum attract long-term investors. The jump from 20% to 45% in the investible portion, or float, of BlackRock’s outstanding shares, meanwhile, should attract more investors and potentially increase the odds of BlackRock’s inclusion in benchmark indexes, Mr. Carrier noted.
BlackRock spokeswoman Bobbie Collins declined further comment.