BlackRock buys out Bank of America stake

Global asset manager BlackRock Inc. has agreed to repurchase Bank of America Corporation’s remaining ownership interest in BlackRock, in a deal worth about $2.5 billion or $187.65 per share.

The shares will be retired following the close of the transaction, which will be immediately accretive to earnings per share.

In connection with the transaction, Bank of America Merrill Lynch and BlackRock have worked together to strengthen their enterprise-wide collaboration and enhance their ongoing strategic partnership.

“This stock repurchase and our recent dividend increase evidence our continued commitment to enhancing shareholder value through effective use of our significant free cash flow, while maintaining our strong liquidity and capital position,” said Laurence D. Fink, chair and CEO of BlackRock.

Brian Moynihan, president and CEO of Bank of America Corp. added, “There is a long history of collaboration between Bank of America Merrill Lynch and BlackRock that focuses on providing exceptional investment solutions for our respective clients. Our decision to monetize our stake in BlackRock will have no effect on our commitment to continuing this very successful partnership.”

BlackRock intends to fund the purchase of the shares through available cash and a total of $2 billion of commercial paper, medium-term and long-term debt.

This share repurchase, which is expected to close on or about June 1, 2011, is outside the company’s existing 5.1 million common share repurchase authorization. Immediately following the close of the transaction, BlackRock’s effective pro forma fully diluted shares outstanding will total approximately 183.5 million.