On December 3, 2024, BlackRock, Inc. (BLK, Financial) announced a definitive agreement to acquire 100% of the business and assets of HPS Investment Partners, a leading global credit investment manager. The acquisition, valued at approximately 12.1 million units of a wholly-owned subsidiary of BlackRock, will be exchangeable into shares of BlackRock's common stock on a 1:1 basis, subject to customary adjustments.
The transaction involves the issuance of approximately 9.2 million SubCo Units at closing, with an additional 2.9 million SubCo Units to be paid in approximately five years, contingent upon the achievement of certain post-closing conditions. Furthermore, there is potential for up to 1.6 million additional SubCo Units based on financial performance milestones over the next five years. Up to $675 million in value from the deal will be allocated to an equity retention pool for HPS employees.
In total, the maximum amount of common stock issuable upon exchange of the SubCo Units could reach approximately 13.7 million shares of BlackRock's common stock. The transaction is expected to close in mid-2025, pending customary conditions, including regulatory approvals and the absence of any legal impediments.
The acquisition will be executed through the merger of two wholly-owned subsidiaries of BlackRock into HPS Partners Investment Holdings, LLC and HPS Group Adviser Holdings, L.P. As a result, these entities will become indirect subsidiaries of BlackRock. The equityholders of HPS will receive SubCo Units, which are exchangeable into BlackRock common stock and entitled to participate in cash dividends.
BlackRock has also agreed to appoint Scott Kapnick as a non-voting observer on its board of directors following the transaction's closure. This strategic acquisition is poised to bolster BlackRock's position in the global credit investment market, enhancing its capabilities and offerings to clients worldwide.
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