Bank of America Corp. is selling its remaining interest in BlackRock Inc. back to the asset manager for $2.55 billion.
The deal, announced Thursday by BlackRock, should result in a second-quarter gain of roughly $375 million before taxes for B of A.
Though B of A is cashing out its piece of BlackRock, a move that was widely expected, it will still have some ties to the New York money manager. Tom Montag, the president of B of A's global banking and markets group, will keep his seat on BlackRock's board. Meanwhile, a previously established global distribution agreement, in which B of A can recommend BlackRock products to customers, remains in place.
B of A inherited the BlackRock stake through its 2008 purchase of Merrill Lynch & Co., which had merged its investment management arm with BlackRock two years earlier. That transaction gave Merrill a 49.8% stake in BlackRock. B of A sold off a big chunk of its investment in November, netting about $8.2 billion.
The sale of its remaining 7% stake is "consistent with our strategy of focusing our resources on our core business and in this particular case we determined some time ago that we didn't need to have an investment in BlackRock in order to have a business partnership with them," said Jerry Dubrowski, a B of A spokesman.
When asked whether the extra capital will move the bank along in its plans to increase the dividend, Dubrowski said: "It's a benefit to capital no question. The timing is up to the Federal Reserve."
Earlier this year, after the Fed rejected its request to raise the dividend in the second half, B of A said it will resubmit a capital plan to regulators "when appropriate."
BlackRock agreed to repurchase 13.6 million of its Series B convertible preferred shares for $187.65 apiece, a 2.9% discount to the stock's Wednesday closing price.