BlackRock Inc. , the giant U.S. money manager, said on Thursday that it will buy Barclays Global Investors in a cash and share deal that will turn it into the world's biggest asset manager.

The sale, which also includes the iShares business, will more than double BlackRock's assets to roughly $2.7 trillion and give the company, well-known for working with institutions and governments, access to fast-growing Exchange Traded Funds and retail investors.

BGI, which ranks as Europe's largest hedge fund manager and operates in 15 countries, was long considered a top prize in the industry and BlackRock beat out rivals, including Bank of New York Mellon, to win.

BlackRock will acquire BGI in exchange for 37.8 million shares of common and common equivalents in BlackRock and $6.6 billion of cash.

BlackRock, a 21-year-old firm with deep roots in the mortgage market, has grown into a powerhouse through acquisitions including its 2006 deal to buy Merrill Lynch's asset management operations for $8.6 billion.

(Reporting by Svea Herbst-Bayliss, editing by Gary Hill.)

Merrill Lynch Investment Barclays