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BlackRock says $2.8 billion stock placement priced at 10% discount
By Kenneth Lim
Boston, June 12 - BlackRock, Inc. proposed $2.8 billion common stock placement was priced at a 10% discount to recent market prices, company executives said.
BlackRock plans to sell 19.9 million shares for about $2.8 billion to a group of institutional investors, the company said in a press release Thursday. That works out to a price of about $140.70, a 23% discount to the closing price of its common stock on Thursday.
Proceeds of the placement will be used to help fund the cash portion of BlackRock's proposed acquisition of Barclays Global Investors. BlackRock will pay $6.6 billion in cash and 37.8 million common and common equivalent shares to Barclays plc. Based on Thursday's close, the deal was valued at about $13.5 billion.
In two conference calls, BlackRock chairman and chief executive Laurence D. Fink said negotiations with the investors began "a few weeks ago."
"Earlier than today we agreed with our investors on a share price and the stock market rallied and that's essentially what happened," he said of the current discount pricing. "It's essentially a 10% discount to the 10-day moving average and that's what we're looking for in terms of a setting."
The current discount appears larger but that was because of a run-up in BlackRock stock in the days ahead of the announcement, he said.
"The stock has moved during this noise period, but...it was an appropriate discount," he said.
Fink declined to identify the investors, describing them only as "a global network of companies and clients."
Beyond the stock placement, BlackRock will satisfy the cash consideration of the deal using cash on hand and committed debt facilities. The firm has received a one-year $2 billion revolving facility commitment from Barclays, Citi and Credit Suisse.
BlackRock is a New York-based investment management firm.
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