GLOBAL - Merrill Lynch has agreed to sell its investment management arm Merrill Lynch Investment Managers (MLIM) to BlackRock for US$1.1bn.
Merrill Lynch will retain a 49.8% stake and 45% voting interest in the new independent company, which will have over $1trn in assets under management.
The company will operate under the BlackRock name and be governed by a board of directors with a majority of independent members.
Laurence D. Fink, CEO of BlackRock, will serve as chairman and CEO of the merged firm, while current CEO and president of MLIM Robert C. Doll will become a vice president.
Fink said: “Joining forces with MLIM represents a truly transformational opportunity - the combined company will have broad investment and risk management capabilities and extraordinary global scale that will enhance our collective ability to serve institutional investors worldwide.”
The new BlackRock will have over 4,500 employees in 18 countries and its capabilities will include US and non-US products in each asset class, including products created in investment centres in the US, London, Edinburgh, Tokyo and Australia.
Under the terms of the agreement, Merrill Lynch will have certain restrictions on the sale or acquisitions of shares in the new BlackRock, but will have the right to maintain its ownership percentage in the event of BlackRock’s issuance of additional shares in the future.
According to Merrill Lynch, the transaction will result in a net after tax gain, based on BlackRock’s closing price yesterday, amounting to $1.1bn.
The transaction, approved by both companies’ board of directors, is expected to close in the third quarter of 2006.
BlackRock is a US based investment management firm with approximately $452.7bn AuM at 31 December 2005.
By Daniel Flatt
This week's edition of Professional Pensions is out now.
Nearly 60% of UK employers consider defined contribution (DC) master trusts to be the "most suitable" pension fund for their employees, according to research by Buck.
Companies which have tried to dodge their pension duties by changing their identities are being "hunted" by The Pensions Regulator (TPR) in a crackdown on non-compliance with auto-enrolment (AE).
Removing liquidity restrictions would enable DC funds to capitalise on the potentially higher and safer returns that DB schemes have benefitted from, says Patrick Marshall.