Merrill Lynch Investment Managers/BlackRock Merger Overview Update June 2006 MLIM/BRK-0606 For Informational Purposes Only. This material is not intended to be a solicitation for any investment product referenced herein. FILED BY MERRILL LYNCH & CO., INC. PURSUANT TO RULE 425 UNDER THE SECURITIES ACT OF 1933 AND DEEMED FILED PURSUANT TO RULE 14A-12 OF THE SECURITIES EXCHANGE ACT OF 1934 SUBJECT COMPANY: NEW BLACKROCK, INC. COMMISSION FILE NO. 333-134916 |
BlackRock Overview Combined Assets of US$1 Trillion Fixed Income Equity / Balanced Real Estate Alternatives $433 Billion $354 Billion $27 Billion $13 Billion Liquidity $212 Billion Combined as of March 31, 2006 Risk Management Investment Accounting $3.5 Trillion $50 Billion Announced merger of BlackRock and Merrill Lynch Investment Managers (MLIM) on February 15, 2006 Independent firm in ownership and governance Public company (NYSE: BLK) with over 4,000 employees Headquartered in NYC Laurence Fink continues as Chairman and CEO All founding partners remain affiliated with BlackRock No majority owners Merrill Lynch 49%, PNC 34%, employees and public 17% Majority of Board of Directors is independent Achieve scale in multiple products and markets Combine complementary US retail platforms with mutual funds, managed accounts, and enhanced client service Institutional client base to benefit from additional US dollar and non-dollar products Non-US business to span institutional and retail clients in over 50 countries Spectrum of products across asset classes to broaden with global and non- US products, non-US real estate, and alternative investment strategies Operating in 18 countries and more than 35 cities Investment centers in Boston, Edinburgh, Eindhoven, Florham Park, London, Melbourne, Newport Beach, New York City, Philadelphia, Princeton, San Francisco, Sydney, Tokyo, and Wilmington Client service presence in local markets Expected closing date on September 30, 2006 |
BlackRock and MLIM Combined Diversified product mix Scale across asset classes Products tailored to client needs Selected mergers proposed to rationalize fund families Competitive performance 82%* of BlackRock composites outperformed their benchmark as of December 31, 2005 77% of MLIM composites outperformed their benchmark as of December 31, 2005 84 funds of the combined offerings as of May 31, 2006 have Morningstar ratings of 4 or 5 stars** Global asset management company Over one-third of employees based outside the U.S. Fourteen investment centers in US, UK, Europe, Japan, and Australia Marketing and client service offices in 35 cities plus regional wholesalers Extensive fund offerings registered in domiciles around the world Local resources for operations, administration, and compliance *Based on annualized 3-year gross of fee returns for products with at least a 3-year track record **Ratings are based on historical risk-adjusted performance and the overall rating is derived from a weighted average of the funds' 3-, 5-, and 10-year Morningstar Rating Metrics Combined assets as of March 31, 2006 $1 Trillion AUM by Asset Class US$ Billions $1 Trillion AUM by Asset Class US$ Billions $1 Trillion AUM by Asset Class US$ Billions $1 Trillion AUM by Asset Class US$ Billions BlackRock MLIM Combined Equity1 44 310 354 Fixed Income 306 127 433 Liquidity 86 126 212 Alternatives 17 10 27 Real Estate 10 3 13 TOTAL $463 $576 $1,039 1 Includes Balanced assets $1 Trillion AUM by Client Geography 3/30/2002 Americas (ex-US) 50 US 699.4 Asia Pacific 81.6 Europe/Middle East/Africa 207.6 |
Combining BlackRock and MLIM Equity Capabilities Equity Investment Centers As of March 31, 2006 Office Location Combined Equity AUM Excluding Balanced Assets (US$ billions) Princeton $165.2 Australia $2.9 Boston $17.2 Edinburgh $10.1 London $91.4 New York $12.2 Philadelphia $3.4 Tokyo $11.1 TOTAL $313.5 Similar business philosophy in equities Culture of investment excellence Distinct portfolio teams accountable for investment results in specific products Structure of regional investment centers with integrated research supplemented by shared global investment perspectives Process that enhances returns through careful risk and performance analysis Pay for performance compensation model that aligns portfolio managers with clients In general, the MLIM and BlackRock equity teams remain unchanged Broad and deep resources for managing equities Bob Doll, Global CIO for Equities Quintin Price, CIO for EMEA Pacific Equities 46 Equity Portfolio Management Teams Global Equity Trading team Risk and Quantitative Analysis Group BlackRock Solutions Technology Platform Investment decision-making Decentralized team decision-making Centralized dialogue resulting in knowledge sharing Differentiated and diverse product line tailored to investor's needs Equity and balanced products Institutional and retail products Global and local market products |
BlackRock Equity Platform BlackRock Equity Investment Philosophy Integrated research and fund management teams, where performance is the primary focus Shared investment ideas, common view of risk management and portfolio attribution Risk and Quantitative Analysis Group Leaders: Golub, Fishwick, Patti, Damm Locations: NY, Princeton, Philadelphia, London, Edinburgh, Tokyo, Melbourne Bob Doll, Global CIO, Equities Global Equity Trading Leaders: Mahoney, Gitlin, Walker-Duncalf Locations: Princeton, NY, Philadelphia, Boston, London, Edinburgh, Tokyo, Singapore, Melbourne BlackRock Solutions Technology Platform Aladdin(r) Straight-through processing Galileo(tm) Shared Research Database Green Package(r) Risk Management Tools Philadelphia Team Global Opportunities: Callan, Carey, Rosenbaum London Teams Edinburgh Teams Tokyo Teams Melbourne Teams Quintin Price, CIO EMEA Pacific Equities Japan Large Cap: Desmidt Japan Small Cap: Tateda Australian Equities: Himpoo Quantitative Teams New York: Byrket, Herrmann Tokyo: Hosaka Melbourne: Liow Princeton: Bertani, Clark, Jelilian, Roisenberg, Russo Portable Alpha: Green, Struthers Large Cap Series: Doll Basic/Focus Value: Rendino, Martorelli US Active Large Cap Value: Gaskin Balanced Capital: Schansinger Equity Dividend: Shearer Fundamental Growth: Burke Global Allocation: Stattman, Chamby Global Value: Bell, Kassem, Berman Global Small Cap: Coyle, Balaraman Value Opportunities: Baum Latin America: Landers Pacific: Moyer Healthcare: Schreiber, Hodgson Natural Resources: Shearer Utilities: Anderson Global Technology: Vignola, Zidar Financials: Kassem Private Investors: Willoughby UK Equity: Macpherson UK Specialist: Chappell European Style Diversified: Macmillan European Specialist: Lee Emerging Europe: Bourrier, Monovski Natural Resources: Birch Large Cap Global: Turnill Asia Pacific: Moakes Strategic Investment Group: Cameron-Watt EAFE: Anderson, Low European Large Cap GARP: Morillo Pacific Basin: Barry Small to Mid Value: Archambo, Forcione Small to Mid Growth: Wagner, Leary Small Cap Core: O'Connor Fundamental Large Growth: Lindsey, Dowd Energy: Rice, Walsh Health Sciences: Xie Asset Allocation: Zhang Edinburgh Teams Boston Teams Princeton Teams |
Combining BlackRock and MLIM Fixed Income and Liquidity Teams $433 Billion Combined Fixed Income AUM 12/30/2001 US Taxable 319 Global Bond / Non-US Dollar* 65 US Tax-Exempt 49 Assets as of March 31, 2006 1 Excludes balanced mandates 1 "One BlackRock" approach will incorporate MLIM's strengths Keith Anderson, Global CIO for Fixed Income, and Scott Amero continue to lead the fixed income effort Expect to combine teams in several disciplines Jeff Gary and Mark Williams will continue to lead the High Yield and Bank Loan team Kevin Booth will join the team as a portfolio manager Additional analysts will augment our existing efforts in bank loans and distressed debt John Loffredo and Bob DiMella of MLIM will lead the tax-exempt team Team members will be located in Princeton and New York BlackRock Solutions' Aladdin platform being installed at MLIM to facilitate global information sharing BlackRock/MLIM combination accelerates global bond expansion Large, experienced MLIM team in London facilitates our European expansion Significant local presences in Sydney and Tokyo enhance our capabilities MLIM's non-US cash management complements BlackRock's product line Differentiated and diverse product line Products provide range of risk/reward characteristics Global and local market products Institutional and retail products Dedicated "on-balance sheet" capabilities for Financial Institutions and Corporate Cash Strong Liability-Driven Investing products for Europe and the U.S. 12/30/2001 US Taxable Funds 121.3 Tax-Exempt Funds 41.2 US Separate Accounts 24.7 Securities Lending Funds 13.2 Offshore 11.2 $212 Billion Combined Liquidity AUM * Excludes balanced mandates * |
Combined U.S. Private Client Group Private Client Industry Leader 4th largest broker-sold open-end fund family 2nd largest closed-end fund provider 3rd largest SMA provider 3rd largest provider of subadvisory strategies Over 10 million individual investors Resulting business has significant scale and breadth of product Combined business is responsible for $268 billion Strong, broad product line Strength in equity, fixed income and cash management Investment management provided through multiple wrappers Anticipate ongoing reinvestment and product development Competitive performance 84 funds of the combined offerings as of May 31, 2006 have Morningstar ratings of 4 or 5 stars** Extensive Resources focused on serving individual investors Over 400 professionals focused on product, sales, servicing, and marketing Award winning call center and shareholder statements Data as of 3/31/06 **Ratings are based on historical risk-adjusted performance and the overall rating is derived from a weighted average of the funds' 3-, 5-, and 10-year Morningstar Rating Metrics Products Managed $268 bil Combined AUM As of 3/31/06 3/30/2001 Equity 133 Taxable Fixed Income 41 Tax-Exempt Fixed Incoem 37 Liquidity 48 CDP 9 3/30/2002 Open-End 98 Closed-End 44 SMA 41 Sub-Advised 37 Open-End Liquidity 48 |
A World-Class Mutual Fund Family with Scale Equity product breadth - $70.6 bil in AUM High performing large cap equity funds Selected global funds & strong sector fund line-up 1Fund closed to new investors Bold denotes 4 and 5 star funds as of 5.31.06 Fixed income product breadth - $20.0 bil in AUM High performing municipal funds Multiple core taxable funds Strong performing sector funds, including High Yield and GNMA |
Consolidating BlackRock and MLIM Fund Families Currently, BlackRock has 43 open-end funds and MLIM has 59 open-end funds (excluding money market funds) As we considered different fund mergers, we did so with several goals: Provide shareholders with strongest products Reduce number of funds that overlap Generally, shareholders would maintain or improve expense ratios Considered a variety of administrative impacts We are proposing the following fund mergers: 1 Surviving fund track record |
Enhancements to Fund Family Proposed mergers are shareholder friendly Generally, shareholders invested at same or lower fees in each product Conformed redemption fees for combined fund family Fee is 2% for redemptions or exchanges made in 30 days (Exemptions for certain investors) Fee assessed on small, SMID, International, global and certain fixed income and sector funds Shareholder-friendly actions taken proactively by BlackRock Closing B shares to new purchases in all fixed income funds (still available for exchanges) Aligned A share sales loads and breakpoints to be more competitive with the industry R shares will be added to selected BlackRock funds: Fixed income: High Yield, Government Income, Core Bond Total Return (Total Return II), and Core PLUS Total Return (Total Return) Equity: Small/Mid-Cap Growth, Aurora, and Mid-Cap Growth Redemption Fees1 For Combined Fund Family Redemption Fees1 For Combined Fund Family Redemption Fees1 For Combined Fund Family Small/SMID Global/International Sector/Fixed Income Aurora Small Cap Core Small Cap Growth Small Cap Growth II Small Cap Index Small Cap Value SMID Growth U.S. Opportunities Value Opportunities Developing Captl Mkts EuroFund Global Value Global Allocation Global Dynamic Equity Global Financial Services Global Growth Global Opportunities Global Small Cap International International Index Intl Opportunities International Value Latin America Pacific All Cap Global Rscs Global Resources Global Science & Tech Global Technology Health Sciences High Income High Yield International Bond Real Investment World Income 1) 2% redemption fee is assessed to redemptions or exchanges made within 30 days; exemptions for certain investors. |
Summary of Fund Mergers |
Additional Name, Portfolio Manager and/or Investment Changes As a result of the announced combination of BLK and MLIM, we evaluated the names of funds All MLIM funds will be rebranded as BlackRock We are recommending a number of name changes to assist in competitive positioning Certain funds portfolio management teams will change or have additional members named Selected municipal funds will expand their guidelines to have greater latitude to purchase AMT bonds and/or below investment grade municipal bonds 1 It is anticipated that following the closing of the MLIM and BlackRock transaction, Matthew Marra and Andrew J. Phillips will join Keith Anderson and Scott Amero in the day-to-day management of the Portfolios 2 Portfolio guidelines will be expanded to allow greater latitude to purchase AMT bonds (shareholder vote required) and bonds rated below investment grade 3 Portfolio guidelines will be expanded to allow the purchase of bonds rated below investment grade. |
Combined Closed-End Fund Complex Combined closed-end fund complex with over $44 billion in assets 2nd largest closed-end fund provider Resulting business has significant scale and breadth of product 13 equity funds 24 taxable fixed income funds 67 municipal funds Committed to continuing leadership and innovation Continued focus on supporting the funds in the secondary market Dedicated team of closed-end fund professionals Focused on building relationships with closed-end fund research analysts Maintain strong relationships with financial advisors, institutions, and broker-dealer home offices Data as of 3/31/06 Products Managed $44 Billion Combined AUM As of 3/31/06 Equity 5.5 Taxable Fixed Income 13.1 Tax-Exempt Fixed Income 25.7 |
Closed-End Fund Line-Up* * Names reflect BlackRock branding post transaction. 1 Shareholders are being asked to approve a merger into the open-end EuroFund. 1 |
Current MLIM Closed-End Funds with Portfolio Manager Changes |
Current BlackRock Closed-End Funds with Portfolio Manager Changes |
Disclosure In connection with the proposed transaction, a registration statement of New BlackRock Inc. ("New BlackRock") which includes a preliminary proxy statement of New BlackRock and other materials have been filed with the Securities and Exchange Commission (the "SEC") and are publicly available. Investors are urged to read the registration statement and other materials when they are available because they contain important information. Investors will be able to obtain free copies of the registration statement and proxy statement, when they become available, as well as other filings containing information about BlackRock and Merrill Lynch & Co., Inc. ("Merrill Lynch"), at the SEC's Internet site (http://www.sec.gov). Merrill Lynch, BlackRock and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from BlackRock stockholders in respect of the proposed transaction. Information regarding Merrill Lynch's directors and executive officers is available in its proxy statement for its 2006 annual meeting of stockholders, dated March 10, 2006, and information regarding BlackRock's directors and executive officers is available in its proxy statement for its 2006 annual meeting of stockholders, dated April 28, 2006. Additional information regarding the interests of such potential participants will be included in the registration statement and the other relevant documents filed with the SEC when they become available. # # # Cautionary Language Concerning Forward-Looking Statements Information contained in this document may contain forward-looking statements, including, for example, statements about management expectations, strategic objectives, growth opportunities, business prospects and regulatory proceedings, transaction synergies, and other similar matters. These forward-looking statements are not statements of historical facts and represent only Merrill Lynch's beliefs regarding future performance, which is inherently uncertain. There are a variety of factors, many of which are beyond Merrill Lynch's control, which affect the operations, performance, business strategy and results and could cause actual results and experience to differ materially from the expectations and objectives expressed in any forward-looking statements. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only to the date on which they are made, and may be impacted by a variety of factors that are beyond Merrill Lynch's and BlackRock's control. Merrill Lynch and BlackRock do not undertake to update these statements to reflect the impact of circumstances or events that arise after the date on which they were made. Investors should consult Merrill Lynch's and BlackRock's reports filed with the SEC for any additional information. |