Barclays shares opened with a fall this morning, as the bank announced the proposed sale of its fund management division, Barclays Global Investors (BGI).
The prospective buyer, US investment
management group BlackRock, intends to pay £8.2billion for BGI with a combination of BlackRock shares
and cash, and will become BlackRock Global Investors if the deal is secured.
The deal will supersede a previous offer made by CVC Capital Partners Group, which offered to buy the iShares division of Barclays Global Investors. A clause in the deal meant that Barclays was able to shop around for a better offer until June 18, and negotiations continue as CVC is offered the chance to make a counter offer for the whole of BGI.
If a better deal with CVC is not made, Barclays will have to pay a break fee to CVC of £106million.
Commenting on the BlackRock offer, Barclays Group chief executive John Varley said: "We believe that the proposed transaction is a very good one for our shareholders.
"We would realise immediate and substantial value for BGI and create material economic exposure to a highly competitive global asset manager through two channels: a substantial equity participation in BlackRock and the ongoing commercial relationship between Barclays and the new business."
Barclays Group president, Robert E Diamond Jr added: "The benefits of convergence could be accessed through a strong partnership rather than full ownership; our stake in one of the newest industry leaders would enable us to derive new opportunities in both Barclays Capital and Barclays Wealth."
Barclays has so far abstained from receiving Government help during the recession, and according to the BBC's Robert Peston, this deal is, "to raise capital as protection against further losses on loans and investments it made in the bubble years – and to provide a bit more insulation from what other financial storms may lie ahead."
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