and Merrill Lynch
announced their plan today to merge Merrill Lynch’s asset management arm and BlackRock. The deal will make BlackRock one of the world's ten largest asset managers with nearly $1 trillion in assets under management when it closes in September.
With more than 4,500 employees, BlackRock will make its presence felt in key markets, including the U.S., the U.K. Asia, Australia, the Middle East and Europe.
As previously reported in 401kWire, Merrill Lynch's sale of its asset management arm comes as no surprise since Merrill Lynch Investment Managers was rebranded as Princeton Portfolio Research & Management
Merrill Lynch will have a 49.8 percent stake and a 45 percent voting interest in the new company. PNC Bank's
current share of 70 percent in BlackRock will shrink to 34 percent, and employees and shareholders will hold approximately 17 percent.
The transaction will free up capital that Merrill Lynch can better use to focus on distribution, said Merrill Lynch officials. Merrill CFO Jeff Edwards told analysts that the deal would free about $2 billion of Merrill's capital for reinvestment elsewhere or for stock repurchases.
"We will gain what amounts to a half-interest in a firm twice the size of our unit with enhanced growth prospects, both organically and through potential acquisitions, with its own publicly traded stock," Stan O'Neal
, chairman and Merrill Lynch CEO, explained.
For BlackRock, the institutionally centered asset manager now will have access to Merrill Lynch’s retail fund world.
Merrill Lynch’s fund arm offers 154 mutual funds internationally, and offers 108 open- and closed-end stock and bond funds in the U.S. These will contribute to BlackRock’s 100 funds for equity, fixed income and liquidity funds.
Merrill Lynch will hold two seats on BlackRock's board of directors that will be controlled by independent members.
BlackRock CEO Laurence Fink
will serve as chairman and CEO of the new company, and Ralph Schlosstein
will continue to act as president and director. Robert Doll
, president and chief investment officer of Merrill's fund arm, will become vice chairman, CIO of global equities and chairman of private client operating committee.
Upon the board's approval, Doll and Robert Kapito
, vice chairman and head of portfolio management of BlackRock, are expecting to become members of the new BlackRock’s board of directors. On Merrill's side, O'Neal and Gregory Fleming
, president of global markets and investment banking, are planning to serve on the board.
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