PNC PNC Financial Services Group Inc

Bank of America Corp. (BAC) is offering at least 34.5 million shares it holds in money manager BlackRock Inc. (BLK), while fellow part-owner PNC Financial Services Group Inc. (PNC) is selling up to 7.5 million shares, BlackRock said Wednesday.

Bank of America, the largest U.S. bank by assets, may sell another 6.3 million shares in the overallotment option, which would put its total sale at a value of $7.06 billion according to Tuesday's closing price.

With the PNC shares, a total of $8.36 billion of BlackRock's shares, as of Tuesday's close, could be sold when the deal is priced, expected next week.

The news sent BlackRock's stock sliding 3.9% Wednesday to $166.33. It's now down 28% this year, after surging nearly 75% in 2009, but has rebounded more than 20% from its lows in July.

BlackRock's standing has soared since the financial crisis. It became the world's largest money manager in 2009 after scooping up business and multiplying its assets under management many times over. Among its high-profile workings, it was an adviser to J.P. Morgan Chase & Co. (JPM) on its deal to purchase Bear Stearns' assets in March 2008, and an adviser to the U.S. Treasury Department on its Troubled Asset Relief Program.

Bank of America inherited its one-third stake in BlackRock through its purchase of Merrill Lynch during the financial crisis. It had been previously reported the bank was looking for ways to shed the stake as it tries to reduce exposure to outside risks and concentrate on its key businesses.

The sale comes after BlackRock called for Bank of America to take back billions in failing mortgages in a letter that ultimately sent Bank of America shares down last month. Bank of America has said it would defend itself against buying back mortgages.

BlackRock Chief Executive Larry Fink later said the market was overreacting by selling Bank of America shares. BlackRock said in its filing "it has strong relationships with each of its significant stockholders," including a distribution agreement with Merrill Lynch that would be retained after the sale.

Bank of America has already sold various holdings, partially in response to new capital requirements from the so-called Basel accords. However, Sandler O'Neill analyst Jeffery Harte said in a note "it is far from certain" the BlackRock stake would have been restricted by the Basel accords because of the way it is structured.

Bank of America spokesman Jerry Dubrowski said selling the stake was "consistent with our strategy to narrow the focus of our franchise and ensure that every activity we have at Bank of America is core to our three customer groups: consumers, companies and institutional investors."

As part of the share sale agreement, BlackRock will also swap 7.25 million preferred shares into common shares.

If the overallotment clause is exercised, Bank of America will no longer own any BlackRock common shares. Its economic interest in BlackRock, all in the form of preferred stock, will decline to 12.6% from the current 33.9%.

BlackRock is the latest in a string of equity sales by Bank of America this year, some of which the changing Basel rules played a part in. In June alone, Bank of America sold a $3.9 billion stake in Itau Unibanco Holding S.A. (ITUB, ITUB4.BR), a $2.9 billion stake in the Mexican subsidiary of Spain's Banco Santander SA (STD, SAN.MC) and the $440 million remaining position it held in MasterCard Inc. (MA).

Chief Executive Brian Moynihan said in September he wanted a smaller bank that's focused on growing earnings and shareholder potential.

PNC's economic interest in BlackRock, including both preferred equity and common shares, will decrease to 20.3%. The company currently holds 24.3% of BlackRock preferred shares.

PNC spokesman Fred Solomon said the Pittsburgh bank considers its stake in BlackRock to be "a key component" of its revenue strategy but that it saw the sale as a chance to adjust its risk slightly.

BlackRock had $3.45 trillion in assets under management as of the end of September.

Merrill Lynch, Pierce, Fenner & Smith Inc., Bank of America's securities brokerage unit, and Morgan Stanley & Co. are underwriters of the sale.

-By David Benoit and Amy Or, Dow Jones Newswires; 212-416-2458; david.benoit@dowjones.com

(Liz Moyer in New York contributed to this article.)

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