Bank of America, PNC Sell $8.3 Billion of BlackRock

Tuesday, 09 Nov 2010 10:09 AM

 

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BlackRock Inc. stakeholders Bank of America Corp. and PNC Financial Services Group Inc. sold $8.3 billion of stock in the New York-based investment firm, the biggest public offering in the U.S. this year.

The banks, BlackRock’s two largest investors, sold a combined 51.1 million shares at $163 each, the company said yesterday in a statement. The secondary offering was completed at 3.6 percent below BlackRock’s closing price in New York Stock Exchange composite trading yesterday. BlackRock fell 2.4 percent, or $4, to $165.09 at 10:00 a.m. in New York.

Bank of America and PNC said last week they would offer as many as 48.3 million shares as banks seek to reduce investments not crucial to their main businesses. The sale was increased to meet investor demand. BlackRock, the world’s largest money manager, won’t receive any proceeds from the offering.

Before the sale, Charlotte, North Carolina-based Bank of America held 34 percent of BlackRock. The bank got its stake through its acquisition of Merrill Lynch & Co. last year. PNC, based in Pittsburgh, controlled 24 percent. Its stake in BlackRock will drop to 20 percent. The company was BlackRock’s owner before the fund manager went public in 1999.

Some of the stock sold by the banks was converted from preferred shares.

BlackRock said Bank of America plans to sell an additional 2.45 million shares directly to an institutional investor at the offering price. Bank of America also granted the underwriters a 30-day option to purchase an additional 5.21 million to meet further demand. After exercising the underwriter’s over- allotment option, also known as the green shoe, Bank of America’s stake in BlackRock will drop to 7.1 percent.

BlackRock, whose shares have retreated from its closing peak of $242.81 on Jan. 11, has declined 29 percent this year.

Units of Bank of America, Morgan Stanley and Barclays Plc underwrote the deal. Barclays, based in London, owns 20 percent of BlackRock, a stake it obtained as part of its deal to sell its investment unit to the firm in December.

Bank of America in the past year has sold its Columbia Management fund unit, its First Republic Bank catering to wealthy individuals, stakes in Brazilian and Mexican banks and about $3 billion in private-equity holdings. PNC in February said it would sell its asset-servicing unit to Bank of New York Mellon Corp.

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