The PNC Financial Services Group Inc. plans to sell its investment in BlackRock Inc. through a registered offering and related buyback by BlackRock. PNC currently holds 34.8 million common and Series B preferred shares of BlackRock, representing 22.4 percent ownership.
The underwriters will have an option to purchase an additional amount of BlackRock shares, within 30 days following the offering’s pricing. In addition, BlackRock has agreed to repurchase $1.1 billion of its stock from PNC, which is conditional upon completion of the offering.
This could result in the sale of PNC’s entire holding in BlackRock, excluding 500,000 BlackRock shares that PNC is retaining for a donation to the PNC Foundation by the end of the second quarter of 2020.
PNC originally purchased BlackRock in 1995 and the two companies have had a mutually beneficial relationship for more than 25 years.
“BlackRock’s long track record of strong performance and growth has created significant value since PNC acquired our stake in the company,” PNC Chairman, President and CEO William S. Demchak stated. “As good stewards of shareholder capital, we have consistently reviewed options to unlock the value of our investment. We feel the time is now right to do just that, realizing a substantial return on our investment, significantly enhancing our already strong balance sheet and liquidity, and leaving PNC very well-positioned to take advantage of potential investment opportunities that history has shown can arise in disrupted markets.”
In addition to the direct economic benefit, Demchak said the divestiture of PNC’s stake in BlackRock will eliminate any regulatory obligations associated with the ownership of a large position in another diversified financial services company.
The transaction has been approved by PNC’s board.