Under the terms of the deal, Barclays will receive 37.8 million new BlackRock shares, giving it a 19.9 per cent stake in the enlarged BlackRock Group, to be renamed BlackRock Globlal Investors. BlackRock will also pay $6.6 billion in cash.

Barclays said it decided to accept the US firm’s offer for the whole of San Francisco-based BGI because it was superior to the transaction that had been agreed with Blue Sparkle and CVC Capital Partners Group to buy BGI’s iShares business, as announced in April this year.

“Unless Barclays receives an offer from CVC by the end of Thursday 18 June 2009, which it considers to match the BlackRock Offer, the Barclays Board will accept the BlackRock offer and recommend it to Barclays shareholders for approval at a general meeting to be called for the purpose,” Barclays said in a statement.

Barclays, unlike some of its peers, has not received taxpayer funding to shore up its balance sheet. Analysts expect that the financial crisis will encourage banks and other groups to spin off parts of their business to boost capital.

BGI’s highly regarded iShares business is the world’s biggest provider of exchange traded funds, a sector that has grown rapidly in recent years. Typically charging a fee that is far lower than for conventional funds, ETFs track the indices of markets such as the US equity market and are traded and listed like individual equities.

If the BlackRock/Barclays deal is approved, the enlarged asset manager will be the biggest investment management services in the world with assets of about $2.8 trillion, based on figures for 31 December last year. BGI employs around 3,000 staff.

“If the proposed transaction proceeds, Barclays would expect to realise a net gain on sale of $8.8 billion, based on the closing price of BlackRock common stock of $182.60 on 11 June 2009, the net assets of the BGI business subject to disposal as at 31 March 2009 and transaction costs,” the statement said.

Citi and Credit Suisse served as lead financial advisors to BlackRock. Banc of America Merrill Lynch Securities, Morgan Stanley, and Perella Weinberg Partners provided additional financial advisory support.