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The Merrill Lynch-BlackRock Deal Signals Major Shift in Financial Services

Knowledge at Wharton·@HashtagPLUS·about 1 month ago
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When one company sells a big part of itself to another, the financial markets often judge one party the winner, the other the loser. Not so with Merrill Lynch’s mid-February decision to sell its asset-management operation to BlackRock, a money manager serving wealthy investors and institutions, and best known for its conservative focus on bonds and risk-management products. Analysts and investors cheered, bidding up the shares of both companies. By acquiring Merrill’s $539 billion mutual fund family, BlackRock will quickly broaden its stock-fund offerings and its appeal to retail customers. Merrill, by acquiring just under 50% of BlackRock, will do well if BlackRock can strengthen the performance and appeal of Merrill’s disappointing fund operation. The transaction was valued at roughly $9 billion, representing the value of the BlackRock stake Merrill will acquire, assuming the deal is completed by the end of the year as planned.…

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