US asset manager BlackRock announced Thursday it is buying Barclays Global Investors, the investment arm of British bank Barclays, for $13.5 billion.
The purchase - which is still subject to approval by Barclays shareholders - would double BlackRock's size and create a firm managing assets worth some $2.7 trillion, employing over 9,000 people in 24 countries, according to the New York-based investment group.
In the deal, including BGI's market-leading iShares trading platform, BlackRock would acquire BGI for $6.6 billion in cash and $37.8 million in shares.
"The shares will represent a 4.9 per cent voting interest and an aggregate 19.9 per cent economic interest in the combined firm, which will be renamed BlackRock Global Investors," the statement read.
"The combination of BlackRock and BGI would bring together market leaders in active and index strategies to create the pre-eminent asset management firm," the company said. The transaction "would create an independent and fully integrated asset management firm with combined assets under management of over $2.7 trillion".
BGI, one of Barclays' most valuable branches with some $1.5 trillion in assets under management, has attracted interest from several buyers since April, but in recent days BlackRock was reportedly the favourite to swoop in for the deal.
If finalised the transaction will provide a valuable influx of cash for Barclays, which has hoped to strengthen its capital without resorting to assistance from the British government - something the bank has avoided so far during the world economic crisis.
"We are incredibly excited about the potential to significantly expand the scale and scope of our work with investors throughout the world," BlackRock CEO Laurence Fink said in a statement. "The combination of active and passive investment products will be unsurpassed."
He added that the expanded firm "will remain at the forefront of addressing key investment issues and trends that have emerged over the past decade and are now accelerating dramatically".
These include "globalisation of capital markets, a greater focus on asset allocation" plus "fiduciary management, risk management and advisory services".
Blake Grossman, the current BGI chief executive, will stay on to serve as a vice-chairman of the combined firm, said Mr Fink.
"The two firms mesh well, and I have every confidence we will smoothly integrate into one organisation," Mr Grossman said in the statement. Barclays in April agreed to sell iShares to private equity group CVC Capital Partners for $4.4 billion to help the bank avoid having to join a government insurance scheme for risky assets.
Barclays has the right to break the deal and sell to a third party up to late this month.