BlackRock Largest Shareholder To Sell Entire Stake After Making 70-Fold Gains

PNC Financial Services Group Inc. PNC on Monday announced that it is exiting its investment in asset management firm BlackRock Inc. BLK.

What Happened

The Pittsburgh-based bank said that BlackRock has agreed to buy back shares worth $1.1 billion, and the rest will be sold in a secondary public offering. It is the largest shareholder in BlackRock, with a 22.4% stake.

The bank noted that it is saving 500,000 shares in BlackRock to be donated to the PNC Foundation by the end of the second quarter this year.

If the public offering, repurchasing by BlackRock, and underwriters exercising their options goes as planned, it would have sold the rest of its entire stake in the asset management company.

Time Is Ripe, Chairman Says

"BlackRock's long track record of strong performance and growth has created significant value since PNC acquired our stake in the company," PNC Chairman William Demchak said in a statement. "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," he added.

Demchak further noted that the divestment would leave PNC "well-positioned to take advantage of potential investment opportunities that history has shown can arise in disrupted markets."

PNC had purchased BlackRock back in 1995 for $240 million and has trimmed its stake over the years. The Wall Street Journal noted that, even omitting out the dividend paid over the years, the bank has still made a 70-fold gain on its investment, as BlackRock has a market valuation of about $76.54 billion.

Price Action

BlackRock shares closed 1.14% lower at $493.11 on Monday and dipped another 3.2% in after-hours at $477.50.

PNC closed 2.77% lower at $102.12 per share and jumped 4.7% higher in the after-hours session at $106.94.