BlackRock agrees acquisition of Barclays Global Investors.

Barclays PLC has announced that it has found a buyer for Barclays Global Investors (BGI), after receiving a binding offer from BlackRock Inc, a premier provider of global investment and risk management.

The announcement came in a letter sent to Institutional Clients from BGI CEO Blake Grossman, who said the company is “very excited by the combination, and the significantly increased intellectual capital, product scope and global presence that it offers our clients and our people.” He also added that clients will be kept informed at all stages of the process.

Under the terms of the agreement, BlackRock would acquire BGI in exchange for 37.8 million shares of common and common equivalents in BlackRock and $6.6 billion (£4.1bn) in cash. This will give Barclays a 19.9% share in the firm.

Blake Grossman will assume the role of Vice-Chairman in the combined business, which once fully integrated will have combined assets under management of over $2.7 trillion.

The transaction also includes the purchase of BGI’s market-leading ETF (Exchange Traded Funds) platform, iShares. Barclays had originally received an offer from CVC Capital Partners, a global private equity and investment advisory firm for iShares; however the Barclays board said that the new offer would represent “superior benefits to both shareholders and clients.”

BlackRock has also issued a statement, and in it Laurence D. Fink, Blackrock Chairman and CEO, commented: “We are incredibly excited about the potential to significantly expand the scale and scope of our work with investors throughout the world. The combination of active and passive investment products will be unsurpassed, and will enhance our ability to offer comprehensive solutions and tailored portfolios to institutional and retail clients.”

The deal is expected to be completed in the fourth quarter of 2009, pending approval from Barclays shareholders, regulatory approvals, client consents and customary conditions.