BlackRock Values Barclays Investment $13.5 B

Darlington Musarurwa
12 Jun, 2009
New York City

BlackRock agreed to acquire Barclays investment management unit for $13.5 billion. Barclays will record $8.8 billion in capital gains and lift its core capital ratio to 8%. Barclays and other banks will provide $2 billion in financing.

[R]6:00 PM London, 1:00 PM New York – BlackRock agreed to acquire Barclays investment management unit for $13.5 billion. Barclays will record $8.8 billion in capital gains and lift its core capital ratio to 8%. Barclays and other banks will provide $2 billion in financing.[/R]

UK stocks rise and fall with the volatility in the commodities prices and today it was a down day. Miners declined as prices of copper and zinc eased in trading.

FTSE 100 Index closed lower 19.92 or 0.45% to 4,441.95.

BlackRock Values Barclays Investment at $13.5 Billion

Barclays Plc declined 4.1% to 292 pence after it agreed to sell its investment management unit for $13.5 billon to BlackRock.

Barclays and other banks will provide $2 billion in financing and BlackRock will raise $2.8 billion in an offering to fund the purchase. BlackRock will pay $6.6 billion in cash and the rest in stock.

Previously, Barclays had agreed to sell the unit to CVC Partners for $4.4 billion and provide $3.1 billion in financing and estimated to book $2.2 billion in capital gain.

Barclays after the deal with BlackRock will book $8.8 billion in capital gains that will lift its core tier 1 capital ratio by 150 basis points to 8%.

Gainers & Losers

Man Group Plc increased 6.4% to 282.75 pence after Barclays Plc sold its investment arm at a substantially higher price than it agreed to sell few months.

Vedanta Resource Plc plunged 8.5% to 1,599 pence after the company launched $1.25 billion in convertible bond offering managed by JP Morgan Cazenove.

Antofagasta Plc declined 4.2% to 673.50 pence, Xstrata fell 1.9% to 760 pence and Kazakhmys Plc dropped 2.9% to 737 pence.

GlaxoSmithKline Plc increased 5.4% to 1,115.50 pence and AstraZeneca Plc added 4.4% to 2,629 pence after the World Health Organization announced first pandemic flu since 1968. The flu has affected 15,000 people in U.S. and now has spread to all continents.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 31 increased, 68 declined and 3 were unchanged.

Vedanta Resources plc decliners in the FTSE 100 index with a loss of 8.47% followed by losses in Fresnillo Plc of 5.40%, in Antofagasta plc of 4.26%, in Barclays PLC of 4.11% and in Randgold Resources Ltd of 3.99%.

Man Group Plc led gainers in the FTSE 100 index with a rise of 6.40% followed by increase in GlaxoSmithKline plc of 5.38%, in AstraZeneca PLC of 4.45%, in BT Group plc of 4.09%, in Schroders plc of 2.57%.

Europe Markets Review

In London FTSE 100 Index closed lower 19.92 or 0.45% to 4,441.95, in Paris CAC 40 Index decreased 8.80 or 0.26% to close at 3,326.14 and in Frankfurt DAX index lower 38.02 or 0.74% to close at 5,069.24. In Zurich trading SMI increased 37.99 or 0.69% to close at 5,521.84.