This excerpt taken from the EFA DEF 14A filed Sep 2, 2009.
Description of the Transaction
On June 16, 2009, Barclays Bank PLC (Barclays) entered into an agreement (the Transaction Agreement) to sell its interest in the Barclays Global Investors asset management business (the BGI business), which includes Barclays Global Investors, N.A. (BGI) and BGIs business of advising, sponsoring and distributing exchange-traded funds (the iShares Business), to BlackRock, Inc. (BlackRock), one of the worlds largest publicly traded investment management firms. BGI operates the iShares Business through several subsidiary companies, including Barclays Global Fund Advisors (the Adviser), each Funds investment adviser. Assuming the receipt of the requisite regulatory approvals and the satisfaction of other conditions to closing, the subsidiaries of Barclays operating the BGI business, including the subsidiaries operating the iShares Business, including the Adviser, will be sold to BlackRock (the Transaction) for cash and BlackRock stock, as described in more detail below.
Pursuant to the terms of the Transaction Agreement, BlackRock will acquire BGI for approximately $13.5 billion. As part of the Transaction, Barclays will receive 37.784 million shares of common stock and common stock equivalents in BlackRock worth approximately $6.9 billion (based upon the closing price of BlackRocks common stock on June 11, 2009) and $6.6 billion in cash. The shares will represent a 4.9% voting interest and approximately an aggregate 19.9% economic interest in the combined company. Under the terms of the Transaction Agreement, Barclays will have certain restrictions on the sale or acquisition of shares in BlackRock and will have the right to maintain its ownership percentage if BlackRock issues additional shares in the future. In addition, John Varley, Barclays Group Chief Executive, and Robert E. Diamond, Jr., Barclays Group President and Chief Executive Officer of Investment Banking and Investment Management, are expected to be nominated to the Board of Directors of BlackRock.
The Transaction is subject to certain regulatory approvals and several other conditions precedent to closing. The closing is expected to take place at the end of 2009.
It is expected that substantially all of the current employees of the Adviser will remain employees of the Adviser and will continue to provide services to the Funds following the Transaction. In addition, it is expected that Blake Grossman, Chief Executive Officer of BGI, will serve as a Vice Chairman of the combined company, head of Scientific Investing, and as a member of the Office of the Chairman of the combined company.
At closing, the combined company is expected to be the worlds largest asset management company with more than $3 trillion in assets under management (based on figures as of June 30, 2009) and will have more than 9,000 employees in 24 countries worldwide. The common stock of the combined company will continue to be listed on the New York Stock Exchange, Inc. (the NYSE). The firm manages assets on behalf of institutions and individuals worldwide through a variety of equity, fixed income, cash management and alternative investment products. In addition, a growing number of institutional investors use BlackRock Solutions® for risk management, investment system outsourcing and financial advisory services.
BlackRock is independent in ownership and governance, with no single stockholder owning a majority of its stock, and its Board of Directors is comprised of a majority of independent directors. Merrill Lynch & Co., Inc. (Merrill Lynch), a wholly-owned subsidiary of Bank of America, and The PNC Financial Services Group, Inc. (PNC) own, as of June 30, 2009, approximately 4.6% and 43.9% of BlackRocks voting common stock, respectively, and approximately 46.3% and 30.8% of BlackRocks capital stock on a fully diluted basis, respectively. The remaining approximately 22.9% of the capital stock is held by employees and the public. After the closing of the Transaction, it is anticipated that Bank of America, through its subsidiary, Merrill Lynch, Barclays and PNC will own 3.4%, 4.9% and 32.8%, respectively, of BlackRocks voting common stock and approximately 34.2%, 19.9% and 24.6%, respectively, of BlackRocks capital stock on a fully diluted basis.
The strategic rationale of the Transaction for BlackRock and Barclays is to bring together the highly complementary strengths of BlackRock and BGI in asset classes, investment products, distribution channels and global platforms and achieve larger operating and financial scale. BlackRock and BGI believe they share similar values and cultures with a commitment to teamwork and excellence and a strong emphasis on performance and regulatory compliance. As one combined company, BlackRock and BGI believe they will have a world-class product offering across virtually all asset classes and will bring an even greater solutions-centered approach to retail and institutional clients. BlackRock believes that BGIs record of product development, risk analytics and leadership in quantitative investing, indexing, and retirement solutions will complement BlackRocks expertise in active fund management, tailored solutions, innovative culture and risk management via BlackRock Solutions®. The combined companys products will include equities, fixed income, cash management and alternative investments, and will offer clients diversified access to global markets through separate accounts, common and collective trust funds, mutual funds, exchange-traded funds, hedge funds, and closed-end funds.
BGI, the Adviser and BlackRock anticipate that the Transaction will benefit them and the Funds in a number of ways, including: