Bank of America plans to sell more than half its stake in BlackRock Inc., the companies said Wednesday, clarifying the bank's intentions toward the New York asset manager.
BlackRock plans to begin the sale of 42 million shares of stock under a previous registration statement.
Bank of America will offer most of that amount, 34.5 million shares, reducing its stake in BlackRock to as little as 12.6 percent of the company from 33.9 percent previously, according to an offering document.
PNC Financial Services Group will offer up to 7.5 million shares, BlackRock said, reducing PNC's ownership of BlackRock to 20.3 percent from 24.3 percent. PNC has been a longtime BlackRock shareholder.
Bank of America, based in Charlotte, North Carolina, in the past has declined to comment on what it planned to do with the big stake in BlackRock, which it acquired with its purchase of investment bank Merrill Lynch & Co. in 2008.
BlackRock shares were down 3.8 percent in morning trading.
In a note to investors, Nomura Securities analyst Glenn Schorr said he expected that while the offering "will weigh on the stock in the near term, we think it is a long-term positive as it removes an overhang on BLK shares."
The offering was likely driven by new international bank capital requirements, Schorr wrote.
Bank of America spokesman Jerry Dubrowski said the transaction was consistent with the bank's strategy to sell "non-core assets" to focus on traditional lending businesses. In the last year, the bank has sold roughly $10 billion in assets, including its stakes in South American and Latin American banks.
Bank of America's sales also were part of its $45 billion U.S. government bailout aid repayment, which required the bank to raise $3 billion in capital through asset sales.
A PNC representative was not immediately available to comment.
© 2022 Thomson/Reuters. All rights reserved.