BlackRock Talks Reportedly End

Morgan Stanley walks away over price, CNBC says.

Author:: Lauren Rae Silva
Publish date:: Feb 1, 2006 11:24 AM EST

Morgan Stanley's

(MS) - Get Report

discussions about acquiring

BlackRock

(BLK) - Get Report

reportedly broke off.

The investment bank's interest in the BlackRock, the bond-fund manager that is 70% owned by

PNC Financial

(PNC) - Get Report

, dissipated because of BlackRock's high price,

CNBC

said. An acquisition of BlackRock, considered one of Wall Street's best money managers, would have nearly doubled Morgan Stanley's assets under management.

BlackRock's stock, which trades at a

significantly higher price-to-earnings ratio than others in its peer group, rose almost 8% after the rumors hit the market. A day before the news circulated, Morgan Stanley's own analyst, Chris Meyer, called the company "too rich" to recommend to clients as a buy.

The shares fell $3.63, or 2.7%, to $129.17 Tuesday. They closed at $119.35 a day before

CNBC

reported the talks.

Asset management groups have been changing hands over the last three years.

Citigroup

sold its investment management group to

Legg Mason

(LM) - Get Report

for $2.1 billion last year. In 2003,

Lehman Brothers

(LEH)

bought Neuberger Berman for $3.1 billion. Shortly afterward,

Charles Schwab

(SCHW) - Get Report

bought the private money-management group from

State Street

(STT) - Get Report

. On Monday,

Merrill Lynch

(MER)

announced that it was launching a new brand for its retail asset management business in May 2006.

Morgan Stanley's asset management group has been the subject of many discussions at the bank, and it was viewed as a catalyst in the recent management shake-up. Morgan Stanley CEO John Mack, who took helm at the company in mid-2005, has said he want to boost the money management arm.