Barclays to Sell Entire BlackRock Stake For $5.5 Billion

Barclays Plc (BARC), the U.K.’s second- largest bank by assets, said it will receive net proceeds of $5.5 billion from the sale of its entire stake in BlackRock Inc. (BLK)

The lender sold about 26.2 million shares to money managers for $160 each, London-based Barclays said in a statement yesterday. Underwriters have the option to purchase an additional 2.6 million. New York-based BlackRock will buy back a further 6.38 million shares at $156.80 per share, about 8.8 percent less than the stock’s $171.91 close on May 18, the last trading day before the deal was announced.

The British bank took the 19.6 percent holding when it sold Barclays Global Investors to BlackRock in December 2009 for about $15.2 billion. Barclays is selling as the latest rules from the Basel Committee on Banking Supervision will force the lender to set aside capital against the stake to cushion itself against any decline in the value of the holding.

“After careful consideration, we have decided that now is an appropriate time to release capital from this investment and reinvest it in our core businesses,” Barclays Finance Director Chris Lucas said in a statement today. The sale will boost the bank’s core Tier 1 capital ratio by about five basis points.

Barclays sold its shares for 2.1 percent less than BlackRock’s $163.37 close in New York yesterday.

“Barclays’s rating exhibits little credit for owning the BlackRock stake,” said Ian Gordon, an analyst at Investec in London who rates Barclays a buy. “The Basel III regime is less capital-friendly for retaining such a stake.”

Barclays Chief Executive Officer Robert Diamond is selling assets and focusing on the lender’s most profitable operations to help him meet his 13 percent target for return on equity, a measure of profitability.

Barclays, Morgan Stanley and Bank of America Corp. (BAC) managed the stock offering, the British bank said on May 21.

To contact the reporter on this story: Howard Mustoe in London at hmustoe@bloomberg.net.

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

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