Barclays: BGI Diposal To Blackrock In Best Interests
August 06 2009 - 6:47AM
Dow Jones News
Barclays PLC(BARC.LN) said Thursday it considers the disposal of
Barclays Global Investors, or BGI, business to BlackRock to be in
the best interests of the company. As a result the company
unanimously recommends shareholders to vote in favour of the
resolution.
MAIN FACTS:
-The board believes that the offer from Blackrock would allow
Barclays to retain an ongoing interest in the potential upside from
the larger combined business while unlocking significant capital in
the short term.
-It expects this transaction to generate consideration of $13
billion, although based on last night's closing price for Blackrock
shares the total consideration would now be $14.2 billion.
-Barclays will receive $6.6 billion or GBP4.1 billion in cash
with the balance of the consideration consisting of nearly 38
million Blackrock Shares, representing an economic interest of
19.9% in the enlarged Blackrock Group, which will be renamed
Blackrock Global Investors.
-This economic interest allows Barclays shareholders to
participate in - and enjoy a strong relationship with - the global
leader in the industry, with full dividend rights from the holding
and an opportunity to benefit from the value upside and synergies
arising from the transaction.
-As part of the ongoing relationship between Barclays and
Blackrock, John Varley - Barclays Chief Executive - and Bob Diamond
- Barclays President - will be nominated to the Board of Directors
of Blackrock.
-Taking into account the expected net gain on sale, Barclays
would have reported a pro forma Core Tier 1 ratio of 8.8% and a
Tier 1 ratio of 11.7% as at Jun. 30.
-The Group achieved a profit before tax of GBP3 billion in
challenging market conditions.
-Remains the group's intention to resume dividend payments this
year.
-For the second half of 2009, Barclays intends to make a cash
payment in December, with a final cash dividend for the year being
paid in March next year.
-Barclays wants to maintain strong capital ratios and therefore
expect that the proportion of after tax profit distributed through
dividends will be significantly lower, for the foreseeable future,
than the 50% payout level which we have operated in recent
years.
-Barclays Board considers the disposal of BGI to be in the best
interests of the company. Because of his holding of shares and
options in BGI Holdings under the EOP Scheme, Bob Diamond did not
participate in the board's approval or recommendation of the
disposal although he will vote in favour of the resolution in
respect of his own beneficial shareholdings in Barclays.
-Barclays Board, with Bob Diamond rescusing himself for this
purpose, unanimously recommends Barclays shareholders to vote in
favour of the resolution.
-By London Bureau, Dow Jones Newswires; Contact Ian Walker; +44 (0)20 7842 9296; ian.walker@dowjones.com