The Wall Street Journal reports that sources familiar with the matter said Merrill will trade its funds management business for roughly a 49% share in BlackRock. The deal would create a $1 trillion funds management firm.
Merrill, with 15,160 brokers, has 54,600 employees and its funds management business has around $538 billion in assets under management. BlackRock, based in New York, has $453 billion under management and is 70% owned by a Pittsburgh bank company, PNC Financial Group Inc. PNC’s share in the firm, however, would shrink to roughly 35% in the proposed deal with Merrill, according to the WSJ.
The acquisition would combine complementary businesses. While two-thirds of Merrill’s managed assets are stock funds, two-thirds of BlackRock’s are bond funds. In addition, two-thirds of Merrill’s funds are held by individual investors, while two-thirds of BlackRock’s are held by institutional investors. Merrill’s money management business currently generates greater profits, and BlackRock’s is faster growing.
In the deal being discussed, Merrill Lynch asset-management chief Robert Doll would become vice chairman and chief investment officer for stocks, and join the board along with a few other Merrill designees. BlackRock founder and chief executive, Laurence Fink would be CEO of the combined company, which would retain the BlackRock name.
Sources familiar with the matter said an announcement could come this week.