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Active management giant BlackRock Inc. has entered into a blockbuster deal to buy the indexing and exchange-traded fund giant Barclays Global Investors for $13.5 billion. The deal, which includes ownership of the coveted iShares ETF lineup, was widely rumored to be in the works for several days before its announcement in mid-June.
The combined company will be called BlackRock Global Investors, and it will represent nearly $3 trillion in assets under management.
Barclays will keep about a 20 percent stake in the new BGI, and BlackRock will only have to fork over about half of the estimated deal amount in cash.
This trumps an earlier agreement by Barclays to sell just its iShares unit to private equity firm CVC Capital for $4.4 billion in a deal in which Barclays was providing much of the financing, and was retaining the rights to the share-lending business tied to iShares.
The original deal also included a buyout clause that gave CVC Capital $175 million if Barclays exits the contract, as it has apparently done.
The iPath family of exchange-traded notes operated by Barclays Capital was not included in either deal.
Even without unforeseen regulatory hurdles that could complicate such a merger, the sale to BlackRock is not expected to close until late this year.
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