Barclays in talks with BlackRock to sell BGI for approximately $13 billion

08 June 2009

Barclays, the UK's second-biggest bank, said today that it is in talks with the US private equity group BlackRock to sell its asset-management arm, Barclays Global Investors (BGI) in a deal worth approximately $13 billion (£8.1 billion).

The bank had been approached by many buyers for acquiring BGI after its April announcement of selling its iShares business to boost its capital.

The bank, however said that although it is in advanced talks with BlackRock, it is still talking to another buyer, which could possibly be Bank of New York Mellon, who may make a higher counter offer.

In April, ehe Canary Wharf- (London) based bank agreed to offload its iShares business, which is the exchange-traded funds arm of BGI to Blue Sparkle LP (''Bidco''), a new limited partnership established by private equity firm CVC Capital Partners Group for $4.4 billion (£3.0 billion).

The "go-shop" deal allowed Barclays to look for higher bids for iShares and BGI as a whole and Barclays would pay a $175 million break-up fee if it sells iShares to another buyer.

If the complex deal with San Francisco-based BlackRock succeeds, will see Barclays ending up with take a stake of up to 20 per cent in the US financial group and bring a windfall of $585 million to about 200 BGI employees, who have received the shares through compensation schemes.

Bob Diamond, the president of Barclays and chief executive of Barclays Capital, will be biggest gainer, since he is expected to make approximately $29.5 million, if the deal does go through.