Reports: Merrill Lynch in talks to acquire stake in BlackRock

Monday, February 13th 2006, 10:22 am

By: News On 6

NEW YORK (AP) _ The retail brokerage giant Merrill Lynch & Co. Inc. is in talks to trade its asset-management business for a large stake in money manager BlackRock Inc., according to reports published Monday.

The deal would transform BlackRock into one of Wall Street's top money managers, with an asset base of around $1 trillion (euro840 billion), according to The Wall Street Journal and The New York Times. Both papers said the deal could be completed this week, citing unnamed sources close to the discussions.

The Journal said the deal under discussion would give Merrill a 49 percent stake in BlackRock, whose market capitalization was $8.4 billion (euro7.02 billion) on Friday. But it warned that even though an announcement could come on Tuesday or Wednesday, it is possible the deal may not be completed.

News of the discussions comes just weeks after rival Wall Street investment bank Morgan Stanley ended discussions for obtaining a stake in BlackRock, according to the reports.

Shares of BlackRock have soared in recent months, and the stock closed Friday at $131.51, near the high-end of its 52-week range of $69.38 to $138.

Both BlackRock and Merrill Lynch are coming off very strong financial performances in 2005.

Since it was founded by Chairman and Chief Executive Lawrence Fink in 1988, BlackRock has grown rapidly to become one of the largest U.S. fund-managers. The company generated $233.9 million (euro195.4 million) in earnings last year, or $3.50 per share, up 63 percent from 2004. Assets under management rose 6 percent to $453 billion (euro378.45 billion) as annual revenue ballooned 64 percent to $1.19 billion (euro1 billion).

Merrill Lynch earned a record $5.2 billion (euro4.34 billion), or $5.27 per share, in 2005, up 18 percent from 2004. Annual revenue rose 18 percent to $26 billion (euro21.72 billion) in 2005.