Investor Agenda

Barclays And BlackRock: Big Deal, Big Opportunity

All week we were waiting for the official word that BlackRock would buy Barclay’s, BGI (Barclays Global Investors). They finally sealed the deal on Thursday evening.

Many of those working on the transaction haven’t slept days (they can finally get some sleep this weekend!!!). Price tag: $13.5 billion, making it the largest money-management firm with $2.7 trillion under management. That’s more the Federal Reserve!

BlackRock’s Larry Fink said they’ve been attracted to the BGI for many years now, as early as 2002 because there are few companies he sees that he can put together with BlackRock. Fink said the compliment of the product mix is truly unique.

Maria asked Fink if he overpaid for BGI at $13.5 billion, a big premium, a lot more than what analysts had expected.

Fink said: “The markets will do that test, but Maria, the market had a belief that there was something going on between BlackRock and Barclays for many weeks. Our stock has appreciated by more than 30 percent in the belief. It's down somewhat today, but one of the great indicators, did we pay too much or too little, is that our shareholders, including now Barclays, we have—we acquired a company where we'll buy--we have 11 percent accretion to our earnings in 2010 and it's very rare when people have large-scale mergers like this that is so accretive to our shareholders.”

Maria and Barclays’ President Bob Diamond spoke a lot about this business in the past (even as recent as our assignment for the G20 meeting London back in April) and Diamond always called it a jewel. She asked Diamond how hard was it to sell this.

Diamond answered: “It was strategic, Maria. And as we sat back and looked at what's happening in the investment management space, you know, we set a very clear goal during the difficult markets for both BarCap and for BGI and that was to perform profitably, to stay close to clients, but also as the turmoil ends, to have our businesses in an even stronger strategic position, and this is the kind of environment where deals like this can happen.”

However, it may not be over till the fat lady sings. Now it’s up to private-equity firm CVC Capital Partners Group to see if they want to have the last word and match BlackRock’s offer. We’ll have to wait five business days and see.

Check out Maria’s interview with Larry and Bob on this weekend’s The Wall Street Journal Report.Check your local listings for show times.



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