- 19May
(Reuters) - BlackRock Inc (BLK.N) said it was buying back all of its shares owned by Bank of America Corp (BAC.N), ending a long-term ownership relationship that helped BlackRock grow into one of the world's biggest asset managers.
BlackRock will pay $187.65 per share, or $2.54 billion, for the 13.6 million Series B convertible preferred shares owned by Bank of America.The deal comes just six months after the bank announced it would slash its ownership in the asset manager by selling a large portion of its BlackRock stake.
Shares of BlackRock, which oversees $3.6 trillion in assets, rose 2 percent to $197.28 in morning trading on the New York Stock Exchange. Bank of America shares 2 cents to $11.81.
Bank of America spokesman Jerry Dubrowski said the move is consistent with the bank's strategy to sell business units and investments that do not serve its core customers.
"We determined we didn't need the equity investment in that partnership to continue the working relationship we have," Dubrowski said.
The deal does not sever all ties between the companies, Fink said, noting that Tom Montag, who heads Bank of America's Global Banking and Markets Group, will remain a member of BlackRock's board of directors.
The New York-based asset manager, whose clients include central banks and governments, will use available cash and $2 billion of commercial paper, medium-term and long-term debt to pay for the preferred shares.
"This stock repurchase and our recent dividend increase (are) evidence (of) our continued commitment to enhancing shareholder value through effective use of our significant free cash flow, while maintaining our strong liquidity and capital position," BlackRock Chairman and Chief Executive Laurence Fink said in a statement.
"Our decision to monetize our stake in BlackRock will have no effect on our commitment to continuing this very successful partnership," he said.
(Reporting by Svea Herbst-Bayliss and Joe Rauch, editing by Maureen Bavdek and John Wallace)
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