Barclays Confirms More Than One Bidder For BGI

Post by Sharat on June 9, 2009 · Under Business News, Company News, International Business News, Mergers & Acquistions · Comment 

UK banking group Barclays PLC confirmed yesterday that it was in negotiations with US asset manager BlackRock Inc to sell its Barclays Global Investors (BGI) unit but added a caveat, saying that the talks were far from being completed.

Barclays received overtures for its BGI unit after initially putting its iShares business up for sale. News agencies and websites including money-au reported yesterday that a deal was imminent. Reports which yesterday Barclays sought to play down by confirming that at least one other bidder was still in the running (rumoured to be Bank of New York Mellon).

Yesterday it was reported that that Barclays would agree a US$13 billion sale of BGI for cash and stock to BlackRock and a deal would be announced as early as Wednesday. Such a sale would produce employee payouts of US$585 million.

In Tuesday’s statement, Barclays said it had received additional bids for its iShares and BGI units after having already reached an agreement to sell iShares to private equity firm CVC Capital Partners for US$4billion back in April.

“In assessing such proposals, Barclays has had discussions with a number of parties, including with BlackRock, about both iShares and BGI. The discussions are not yet concluded and there are a number of significant open issues which could affect the nature and terms of any transaction. There is no certainty that these discussions will result in Barclays concluding a different transaction than that announced on 9 April with CVC regarding iShares.” Barclays said in a statement.

Barclays said it would provide an update to the market at the latest by June 19th.

Despite having agreed a sale of iShares to CVC, Barclays has a clause in the sale agreement which gives it the ability to seek additional bids for the business until June 18th. Analysts believe that though Bank of New York Mellon has expressed its desire to do a deal, BlackRock continues to be the most likely firm to complete an acquisition.

Under the terms of a deal, it is thought Barclays would likely take a 20 per cent stake in the combined money management firm, with Barclays nominating most likely its high profile investment banking Chief Bob Diamond to the company’s board.

BlackRock CEO Lawrence Fink has been seeking financing for the proposed deal from Middle Eastern investors including the Kuwait Investment Authority and the Qatar Investment Authority.

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