Barclays to book £5.3bn gain from BGI sale
Barclays said today that it expects to book a £5.3bn (€6.2bn) gain from the sale of Barclays Global Investors to BlackRock, substantially improving its capital strength.
The UK bank said it has agreed to sell BGI to BlackRock for £8.2bn. Barclays said that under the terms of the deal it will get a 19.9% interest in BlackRock and £4bn in cash.
It said the offer from BlackRock is superior to Barclays' previously-agreed deal to sell the BGI division iShares to private equity firm CVC Capital Partners for £3bn.
Barclays said CVC has until next Thursday to match or better the BlackRock offer. Nobody was immediately available to comment at CVC.
If the BlackRock deal goes ahead, Barclays said it will add 150 basis points to its core Tier 1 ratio, lifting it to a pro forma 8% at the end of 2008.
The move makes BlackRock one of the leading global providers of investment management services with pro forma assets under management of approximately $2.8 trillion (€2 trillion) at the end of 2008.
"Barclays would extend its ability to meet the sophisticated investment needs of its existing and future clients and customers by accessing the enhanced investment platform and capabilities of BlackRock Global Investors," Barclays said, adding that it would also gain access through BlackRock to new channels and customers for Barclays products and advisory services, offering new revenue opportunities.
Barclays said its trading performance through to the end of May has been generally consistent with the overall trends it reported on May 7 when it said first-quarter net profit was up 12% from the year before. It said the increased earnings were due to a surge in investment banking profits, and that April trading had been in line with the trend seen in February and March.
Barclays shares closed Thursday at 304 pence. They have almost doubled in value since the start of the year, sharply outperforming the Stoxx Europe 600 bank index which was up 24% over the same period.
---Write to Digby Larner, Dow Jones Newswires; +33 1 4017 1748; digby.larner@dowjones.com
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