BlackRock To Acquire HPS Investment Partners For $12B In All-Stock Transaction: Retail’s On Wait-And-Watch Mode
BlackRock said 100% of the consideration will be paid in BlackRock equity, issued by a wholly-owned subsidiary of the firm (SubCo units), and exchangeable on a one-for-one basis into BlackRock's common stock.
FollowThe world’s largest asset manager, BlackRock Inc. (BLK), announced on Tuesday that it is set to acquire credit-focused alternative investment firm HPS Investment Partners for approximately $12 billion.
The deal will combine BlackRock’s strong corporate and asset owner relationships with HPS’s diversified origination and capital flexibility. It is also expected to increase private markets fee-paying assets under management (AUM) and management fees by 40% and nearly 35%, respectively.
BlackRock said 100% of the consideration will be paid in BlackRock equity, which will be issued by a wholly-owned subsidiary of the firm (SubCo units) and exchangeable on a one-for-one basis into BlackRock common stock.
BlackRock will acquire 100% of HPS's business and assets for 12.1 million SubCo units.
Approximately 9.2 million SubCo units will be paid at closing, while nearly 25% of the consideration, or 2.9 million units, will be paid in five years, subject to the achievement of certain post-closing conditions.
BlackRock said there is potential for additional consideration to be earned—of up to 1.6 million SubCo units— based on financial performance milestones measured and paid in approximately five years.
The asset manager said it expects to retire for cash or refinance approximately $400 million of existing HPS debt but added that the transaction is unlikely to change its leverage profile meaningfully.
BlackRock CEO Laurence D. Fink expressed optimism about what HPS and BlackRock can achieve. “Together with the scale, capabilities, and expertise of the HPS team, BlackRock will deliver clients solutions that seamlessly blend public and private,” he said.
Despite the report, retail sentiment on Stocktwits continued to trend in the ‘neutral’ territory (51/100), accompanied by high message volume.
BLK’s Sentiment Meter and Message Volume as of 6:49 a.m. ET on Dec. 03, 2024 | Source: Stocktwits
BlackRock shares hit record highs in early November but have witnessed some profit-booking since then. The stock is still up by over 27% on a year-to-date basis, outperforming the benchmark indices.
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