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Tuesday, December 01, 2009

The BGI-BlackRock Deal Comes With Job Loss

News summary by MFWire's editors

With the start of a new month, BlackRock can celebrate the close of a blockbuster deal. However, nearly 90 employees may not be sipping champagne.

As the New York investment manager's acquisition of Barclays Global Investors officially closed Tuesday, right on schedule, the company has made plans to eliminate 89 jobs in San Francisco, Bloomberg reports. BlackRock has filed with the California Employment Development Department, declaring that the positions will be terminated on January 8, 2010. San Francisco is home to the U.S. headquarters of BGI.

Yet a BlackRock spokesperson told The MFWire that the cuts represent less than one percent of the newly-combined firm's workforce.

The $13.5 billion deals makes BlackRock the largest asset manager in the world. The combined firm will operate as BlackRock, and will also maintain the brand iShares, BGI's ETF business.

“Beginning today, we move forward as one global firm, operating independently, focused solely on investment and risk management on behalf of our clients," BlackRock CEO Larry Fink said in a statement. "We manage approximately $3.2 trillion on behalf of institutional and retail investors worldwide. We offer truly differentiated capabilities –- active, enhanced and index products –- and the most talented professionals, able to identify investment opportunities, develop innovative investment solutions, and capture the benefits of scale for clients.”

Rumors of the deal surfaced last spring, with authoritative confirmation coming in early June.

As part of the merger, Blake Grossman, CEO of Barclays' investment unit, will be vice chairman of BlackRock.

Additionally, BlackRock has welcomed John Varley and Robert Diamond to its board of directors. Both come from Barclays PLC, where Varley served as group chief executive officer and Diamond as president.

The deal comes with some rebranding, as well. BlackRock has gone sans serif, slightly altering their logo by removing the serifs from every letter, except A. The original logo was a nod to the company's early financial backer, PNC Bank. The company also unveiled a new homepage, touting the finalized merger.

In a speech delivered at the annual MMI conference in October, Fink said that BlackRock had a marketing and advertising budget of $100 million, which was still growing as the Barclays deal finalized.


Company Press Release

NEW YORK--(BUSINESS WIRE)--BlackRock, Inc. (NYSE:BLK) today announced that it has completed its merger with Barclays Global Investors (“BGI”), including the market-leading iShares® exchange traded funds business. The combined firm will operate under the BlackRock name and the iShares brand will be retained.

“Since this transaction was announced in early June, BlackRock and BGI employees have demonstrated their commitment to serving clients and delivering competitive investment results. Both firms maintained strong core business momentum while achieving the close of an unprecedented merger in less than six months,” commented Laurence D. Fink, BlackRock’s Chairman and Chief Executive Officer.

“Beginning today, we move forward as one global firm, operating independently, focused solely on investment and risk management on behalf of our clients. We manage approximately $3.2 trillion on behalf of institutional and retail investors worldwide. We offer truly differentiated capabilities – active, enhanced and index products – and the most talented professionals, able to identify investment opportunities, develop innovative investment solutions, and capture the benefits of scale for clients.”

Additions to Board of Directors

In connection with the closing of the merger, BlackRock also announced that John Varley, Group Chief Executive of Barclays PLC, and Robert E. Diamond Jr., President of Barclays PLC, have joined the BlackRock Board of Directors.

Brief biographical information on Mr. Varley and Mr. Diamond is provided below, and additional information on the full Board can be found on the “Investor Relations” section of BlackRock’s website.

John Varley. Mr. Varley is Group Chief Executive of Barclays PLC. Prior to being named to his current position in September 2004, he had served as Group Deputy Chief Executive beginning in January 2004. He held the position of Group Finance Director from 2000 until the end of 2003. Mr. Varley joined the Executive Committee in September 1996 and was appointed to the Barclays' Board in June 1998. He was Chief Executive of Retail Financial Services from 1998 to 2000 and Chairman of the Asset Management Division from 1995 to 1998. Mr. Varley also serves as a non-executive director of AstraZeneca PLC.

Robert E. Diamond Jr. Mr. Diamond is President of Barclays PLC and Chief Executive Officer of Corporate and Investment Banking and Wealth Management, comprising Barclays Capital, Barclays Corporate and Barclays Wealth. He is an Executive Director of the Boards of Barclays PLC and Barclays Bank PLC and has been a member of the Barclays Group Executive Committee since September 1997. He joined the firm in summer 1996. Mr. Diamond is a member of the Board of Directors for the Institute of International Finance and member of the International Advisory Board of the British-American Business Council.

About BlackRock

BlackRock is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide. With approximately $3.2 trillion under management as of September 30, 2009 (pro forma), BlackRock offers products that span the risk spectrum to meet clients’ needs, including active, enhanced and index strategies across markets and asset classes. Products are offered in a variety of structures including separate accounts, mutual funds, iShares (exchange-traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions®. Headquartered in New York City, the firm has over 8,500 employees in 24 countries. For additional information, please visit BlackRock’s website at www.blackrock.com.  

Edited by: Daniel Tovrov


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