A preliminary prospectus supplement relating to the offering was filed today by BlackRock with the U.S. Securities and Exchange Commission. Barclays Capital Inc., Morgan Stanley & Co. LLC and BofA Merrill Lynch are acting as joint bookrunners in the offering. In connection with the offering, BlackRock has agreed to repurchase up to $1.0 billion of its stock from Barclays conditional on completion of the offering.
Barclays currently holds BlackRock common stock and Series B convertible participating preferred stock (which automatically convert into common stock upon a sale), together representing a 19.6% economic ownership interest in BlackRock. Barclays intends, subject to exercise in full of an option to be given to the underwriters of the offering, to sell its entire holding via the offering and buyback.
In September 2011 Barclays investment in BlackRock was written down to a fair value of £3.4 billion. The subsequent increase in value of the stake has been taken to equity. For regulatory capital purposes the increase is not recognised in Barclays core tier 1 capital. The market value of Barclays investment in BlackRock, based on the closing price of BlackRock common stock on 18 May of $171.91 and assuming conversion of preferred stock, was $6.1 billion (£3.8 billion).
