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Blackrock in £8.2bn Barclays deal Blackrock in £8.2bn Barclays deal
(30 minutes later)
Barclays has agreed to sell its fund management division, Barclays Global Investors (BGI) to US money management firm Blackrock for £8.2bn ($13.5bn).Barclays has agreed to sell its fund management division, Barclays Global Investors (BGI) to US money management firm Blackrock for £8.2bn ($13.5bn).
Blackrock is paying a mixture of cash and shares in a deal that will create the world's biggest asset manager.Blackrock is paying a mixture of cash and shares in a deal that will create the world's biggest asset manager.
Scores of Barclays staff, who own 4.5% of BGI, will share in a £365m windfall. The Barclays staff, who own 4.5% of BGI, will share a £365m windfall. Chief executive Bob Diamond will get £16m.
Unlike Lloyds Banking Group and RBS, Barclays has shunned government help, choosing to raise money privately, to help it weather the financial crisis. Barclays has shunned government help, choosing to raise money privately, to help it weather the financial crisis.
BlackRock said its takeover of BGI would create a firm with combined assets under management of more than (£1.64 trillion). If BlackRock does well, Barclays will benefit Robert PestonBBC business editor class="" href="http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/06/more_protection_for_barclays.html">Read Robert's blog
The sale had been made to raise funds to protect against further losses on loans in investments it had made, according to BBC business editor Robert Peston.
He added that the sale would provide a bit more insulation from what other financial storms may lie ahead.
Bidding war?Bidding war?
Earlier this year Barclays got rid of a crucial part of BGI's business when it sold iShares, to CVC Capital Partners for $4.4bn (£2.7bn). BlackRock said its takeover of BGI would create a firm with combined assets under management of more than £1.64tn.
But under the agreement, it could scrap the deal, if it got a better offer before 18 June. The mix of cash and shares means that Barclays will emerge with 19.9% of the enlarged business.
It will now have to pay a $175m break fee to CVC - unless CVC decides to come in with a better offer and create a bidding war. It means Barclays will have to scrap the earlier deal under which it sold a crucial part of BGI's business, iShares, to CVC Capital Partners for $4.4bn (£2.7bn).
Ishares is a unit of BGI, which specializes in exchange-traded funds. Under the agreement, it was allowed to scrap the deal if it received a better offer before 18 June.
It will now have to pay a $175m break fee to CVC - unless CVC decides to come in with a better offer for the whole of BGI and create a bidding war.
Ishares is a unit of BGI that specializes in exchange-traded funds, which are investment funds that are listed on a stock exchange.