Jones Lang LaSalle

BlackRock Inc.

Shares surged Friday on reports the institutional money manager is in advanced talks with Morgan Stanley Inc. about a possible takeover.

Representatives from Morgan Stanley and BlackRock would not comment on the speculation, which was first reported by financial news cable network CNBC.

Already the potential deal has been endorsed by a number of Wall Street analysts. The sale would enable BlackRock's majority owner -- PNC Financial Services Group Inc. -- to cash out of its 70 percent stake at a point where the money manager's stock is soaring.

"BlackRock management fits better with Morgan Stanley's organization," said Goldman Sachs analyst James Fotheringham in a report to clients. "We envision BlackRock's strong management team potentially adding significantly to Morgan Stanley's organization in a way that they could not for PNC."

BlackRock shares are up 50 percent in the last 12 months, and analysts say the money management firm could fetch between $8 billion and $10 billion. Shares of the company surged $7.31, or 6 percent, to $126.66 on the New York Stock Exchange -- and earlier hit a new 52-week high of $130.77.

Since it was founded by Chairman and Chief Executive Lawrence Fink in 1988, BlackRock has grown rapidly to become one of the largest U.S. fund management firms. Fourth-quarter assets under management rose 6 percent to $453 billion.

Morgan Stanley Chief Executive John Mack took over the ailing securities giant in July, vowing to boost low employee morale and turn around its poorly performing asset management and retail brokerage business. Mack, during conference calls with analysts, has said he would be interested in building its asset management business by snapping up money managers and hedge funds.

Any move to acquire the New York-based investment management firm would immediately hand Morgan Stanley earnings power. BlackRock on Thursday reported fourth-quarter profit jumped 47 percent as the company logged $23.7 million of new business. Annual revenue ballooned 64 percent year-over-year, rising to $1.19 billion from $725.3 million.

BlackRock also projected continued strong performance this year, with profit seen rising 18 percent.

An acquisition would come at a time where other major financial services firms are attempting to beef up their asset management businesses. Profit from asset management is seen as a strong way for securities firms to offset the volatility familiar with investment banking.

However, one analyst has been trying to persuade analysts to avoid BlackRock as an investment because the stock price has become too high. The analyst -- coincidentally from Morgan Stanley -- said the stock has become "too rich for our blood, despite their good growth."

"While BlackRock continues to post strong flows, solid earnings growth, and a healthy pipeline, we remain cautious on valuation," said Morgan Stanley analyst Chris Meter in a report Friday, who raised his 12-month share price target to $105.

A spokesman for PNC, which spun off BlackRock in 1999, did not immediately return telephone calls seeking comment on a potential deal. Shares of the Pittsburgh-based regional bank rose $1.78, or 2.8 percent, to $65.45 on the New York Stock Exchange, and earlier hit a new 52-week high of $68.25.

Morgan Stanley shares fell $1.12 to $58.23 on the New York Stock Exchange.