More news continues to pop as parent corporation Barclays PLC works toward the expiration date of June 18th for its “go shop” period for a possible sale of San Francisco-based (pick one) Barclays Global Investors with its Exchange Traded Funds iShares unit, BGI and iShares sold separately, or iShares alone.
As noted in an earlier post here, the only thing more paralyzing to employees (think lots of “water cooler” talk) to the rumored sale of a business is the protracted auction-like sale of a company – a process that Barclays is utilizing with iShares and iShares parent unit, Barclays Global Investor.
The latest news blurb this morning has suburban Philadelphia headquartered Vanguard making a possible bid of $5 billion for the iShares unit. Combined with Vanguard’s current ETF business, Vanguard would have a business with over $300 billion in assets in the United States alone. The $5 billion bid would trump an existing $4.4 billion bid by private equity firm CVC Partners.
As posted earlier, an iShares acquisition by an existing ETF firm would likely lead to significant staff reductions to exploit redundancies in technology and staff (i.e. two CFOs become one, two technology trading platforms become one, etc.). One bet would be significant downsizing or closure of most of the San Francisco operation as Vanguard absorbed operations at their Pennsylvannia location. That would create not only a hit to iShares staff, but to the City of San Francisco as well as iShares payroll taxes would cease to hit City coffers.
Purchase by private equity firms like CVC Partners would not be without changes, as presumably the new owners would look for ways to increase profits to bring a return on their purchase, potentially resulting in cost cutting such as lay-offs or reduced compensation.
No new words yet on BGI buyers beyond the BlackRock and Bank of New York / Mellon Capital reports that surfaced last month. While Barclays Global Investors is generally a below the radar screen employer in San Francisco, it is also one of San Francisco’s 25 largest private employers; a hit to BGI could impact the mini-financial epicenter of San Francisco. BlackRock is New York based and Mellon Capital is based across the street in San Francisco from BGI’s former headquarters building.
Finally, parent Barclays was apparently surprised to learn that presumed long-term Barclays shared holder Abu Dhabi based International Petroleum Investment Company sold 1.3 billion Barclays shares yesterday, netting a healthy profit after only seven months of holding the shares.