BlackRock May Buy Barclays' ETF Unit

Tuesday, June 09, 2009

According to reports Monday, BlackRock is one of several companies in talks to buy Barclays' BGI asset management unit, for a reported $12 billion asking price.

The deal for the unit, Barclays Global Investors, could also include leveraged index specialists iShares. BCI is the largest fund manager in the world, with over $1.5 trillion in assets under management.

If the deal with BlackRock materializes, BlackRock would swell to a staggering $2.8 trillion in assets under management, making it more than double the size of its next closest competitor, State Street.

The complex deal would include Barclays taking up to a 20% stake in BlackRock. Bank of New York Mellon is also rumored to be in talks to purchase the Barclays unit. BlackRock shares rose $4.64, or +2.8%, in morning trading Monday, while Barclays shares fell 71 cents, or -3.8%.

We recently removed shares of BLK on May 27, when the stock was trading at $154.13. The company has a 1.91% dividend yield, based on Friday's closing stock price of $163.74. The stock has technical support in the $137 to $140 price area. If the shares can firm up, we see overhead resistance around the $179 to $180 price levels. We are watching shares very closely for a possible re-entry.

Courtesy: Forbes.Com