BlackRock to Buy Barclays Unit for $13.5B

BlackRock said the cash portion of the purchase price will be funded through a mix of existing cash, debt facilities and proceeds from the issuing of 19.9 million shares to institutional investors for a total of $2.8 billion.

A group of banks, including Barclays, Citigroup and Credit Suisse, has committed to provide BlackRock with a new 364-day revolving credit facility of up to $2 billion. The facility would be repaid during the term from the proceeds of any capital raising transactions.

The deal is subject to approval from the shareholders of Barclays and regulators.

Blake Grossman, CEO of Barclays Global Investors, will serve as a vice chairman of the combined firm, head of scientific investing, and a member of the Office of the Chairman. Barclays CEO John Varley and President Bob Diamond will join BlackRock's board.

The deal with BlackRock will boost the U.K. bank's tier 1 capital ratio, a key measure of a bank's ability to pay debts of all types, to 8.0%.