) is set to acquire
Credit Suisse Group
) European exchange-traded fund (ETF) business. However, there is
no official word from any of the parties involved in the deal.
BLACKROCK INC (BLK): Free Stock Analysis
CREDIT SUISSE (CS): Free Stock Analysis
STATE ST CORP (STT): Free Stock Analysis
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The terms of the deal are also not known, as it has not been made
public yet. BlackRock and State Street Global Advisors - asset
management wing of
State Street Corporation
) - were the leading contenders for Credit Suisse's European ETF
operations when the company put it up for sale in October last
year. However, State Street pulled out of the bidding in
The acquisition is likely to give BlackRock a competitive
advantage in the European ETF market. Currently, BlackRock is one
of the largest players in the European ETF space with almost 42%
(worth nearly $331 billion) of the market share. As per ETFGI - a
London-based research firm - the buyout may provide BlackRock the
control of nearly 75% of the European ETF market, thereby making
it the dominant player in that sector.
The ETF market has witnessed unprecedented growth in the last
couple of years. With interest rates showing no signs of
improvement, investors are looking for alternative areas of
investment. This has given the ETF market a major boost as it
helps the investors diversify their investments, achieve good
benchmark returns and provides access to multiple assets and
real-time asset allocation at a low cost.
The rapid growth of ETF markets has attracted a lot of attention
from both investors and financial institutions. BlackRock - one
of the largest asset management companies - has not remained
indifferent to this growth story. It has used the opportunities
to propel itself amongst the leaders in this arena.
BlackRock is constantly looking for opportunities that will
further evolve its lucrative ETF business. Besides the
abovementioned deal, the company bought Toronto-based Claymore
Investments, a Canadian ETF operation, from Guggenheim Partners
LLC in March 2012. All these endeavors are expected to prove
beneficial to BlackRock's top-line growth in the future.
BlackRock is expected to announce its fourth quarter 2012 results
on January 17, 2013. The earnings ESP (expected surprise
prediction) - the percentage difference between the Most accurate
Estimate and the Zacks Consensus Estimate - is 0.81% for the
company. This along with its Zacks Rank #2 (Buy) makes us sure
that the company will outpace the Zacks Consensus Estimate.
Presently, we maintain a long-term Neutral recommendation on the