In a deal announced Friday which creates the world’s biggest asset management company, BlackRock Inc agreed to buy Barclays Global Investors for Barclays Plc for $13.5 billion in cash and stocks.

The combined company, to be named BlackRock Global Investors will manage $2.7 trillion in assets.

“The combination of active and passive investment products will be unsurpassed, and will enhance our ability to offer comprehensive solutions and tailored portfolios” to clients, said Laurence D. Fink, BlackRock Chairman and CEO in a released statement.

BGI’s investment management business provides quantitative investing, indexing and retirement solutions. BlackRock’s business also provides services for active investment management, risk management and advisory services to institutional and retail clients.

Terms of the deal

New York-based BlackRock will give Barclays 37.8 million shares of common stock and common equivalents in BlackRock and $6.6 billion of cash. The shares will represent a 4.9 percent voting interest and an aggregate 19.9 percent economic interest in the combined firm, which will be renamed BlackRock Global Investors.

Market reaction

Shares of BlackRock fell 5.8 percent in late morning trading to $172.03 in New York. American Depositary Shares of Barclays fell 2.9 percent to $19.33.

Previous deal cancelled

Barclays’ previous agreement to sell San Francisco-based BGI’s iShares business to CVC Capital partners Ltd. for $4.4 billion will not go through unless within five days, the company matches the terms of BlackRock’s agreement to buy BGI. Barclays will pay CVC a breakup fee $175 million.

Shareholder approval, closing, leadership

The Barclays Board of Directors will execute the purchase agreement with BlackRock and recommend it to Barclays’ shareholders for approval, the company said in a released statement.

The transaction is expected to close in the fourth quarter. The combined companies will have more than 9,000 employees in 24 countries.

Blake Grossman, CEO of BGI, will serve as Vice Chairman of the combined firm, Fink said.

Investment Barclays