Wall Street sources have revealed that BackRock Inc. is in the end stages of a deal to acquire State Street Research & Management Co. from MetLife Inc., The Wall Street Journal reports.
Neither company is willing to comment on terms of the transaction, which is expected to be announced in the near future. State Street, an 80-year old fixture in the Boston financial services community, manages roughly $51.7 billion for a mainly institutional clientele.
Based on a the formula of selling a successful asset management firm for 2% of its assets, industry experts expect BlackRock to pay roughly BlackRock $1 billion for State Street. BlackRock, a publicly traded company which specializes in fixed-income funds and manages approximately $310 billion in assets, declared more than $677 million in revenues for the 12-month period ending in June. PNC Bancorp Inc., a majority shareholder in BlackRock, boasts a $4 billion market capitalization.
Insiders have speculated for months that Prudential was looking to unload State Street. Prevailing wisdom among analysts suggests that U.S.-based insurers lack the commitment to sustain top-flight investment management subsidiaries and, as a result, have shouldered mediocre investment units.