It appears that the done deal is in fact a done deal: New York City-based BlackRock Investment Management will purchase Barclays Global Investors, a unit of London-based Barclays PLC, for $13.5 billion. As part of the transacton, Blackrock will pay $6.6 billion dollars in cash and the rest in shares to Barclays. Barclays will hold a 19.9% stake in the combined firm, to be named BlackRock Global Investors.
There are some surprises, though. What’s not surprising is that BlackRock is the purchaser (given some history with BlackRock and BGI), nor is it surprising that deal is structured so that Barclay’s retains an interest in the new merged entity (similar to the structure that Barclays had negotiated in the earlier, now aborted deal with CVC Capital Partners for the sale by Barclays to them of the iShares unit of BGI.)
What is surprising though is the full steam ahead comments by the acquiring firm BlackRock regarding retaining, if not growing, the employee ranks of the newly merged firm. While the word on the street from people who work in the business has been that BGI side of things will be downsized, the words from BlackRock have been markedly different.
And what’s also been absent is the typical General Counsel / Head of HR sanitized language about “hope to but can’t guarantee” regarding any employment prospects for the acquired BGI ranks.
"They have a spectacular, pretty new office in San Francisco," said BlackRock Vice Chairman Susan Wagner . "We have a much smaller office in San Francisco" that primarily does real estate investing. She said San Francisco "will be an anchor city for us in the U.S. We are looking to grow that over time."
If there was any doubt about San Francisco continuing as a global financial center in the wake of BlackRock Inc.’s absorption of Barclays Global Investors into its expanding universe, here’s BlackRock CEO Larry Fink : "San Francisco can relax. It’s going to stay. We have no intention of changing its dimension," Fink said in an interview Monday at BGI’s glass-paneled headquarters here. If anything, it could grow as the newly named BlackRock Global Investors seeks new opportunities, in the emerging Pacific region, for example.
Strong words, not cautious words, and we’ll see how they play out.
The golden rule, though, in assessing execs and teams is to watch what they do, not just listen to what they say they’re going to do.
I don’t know Larry Fink, though I hope to, and what I’ve read about him through the years seems fairly encouraging. From a distance he appears to be markedly well adjusted and perhaps absent of most of the hubris that afflicts many folks: he sounds a lot like BGI CEO Blake Grossman, who I do know – which is in stark contrast to many of the egos you encounter at senior levels in the financial services world. Catch this description: “The son of a shoe salesman, Mr. Fink shuns the trappings of wealth, however, taking the train rather than a private jet to a farm he owns in New York State. He is married to Lori, a photographer, and has three children. Joshua, the eldest, runs a hedge fund. “
The proverbial proof in the pudding – when you can’t observe what people have done directly – will be to look back on prior acquisitions and ask the question “What did they say, and what did they do?” If they said things would change, and did, or alternately, said things would stay the same, and they did, then there’s a good chance that BGI won’t be gutted. If it’s mixed, I’d guess that the folks at BGI won’t have a long future.
You don’t have to go back very far in San Francisco to find promises made in financial services transactions that were quickly discarded. As NationsBank’s “merger of equals ” with the old Bank of America still sticks in the craws of many.
So with the BlackRock acquisition of Barclays Global Investors and its iShares unit it’s a case of wait and watch.