Jones Lang LaSalle

Jobs picture unclear after BlackRock deal
`Too early to tell' says Merrill Lynch
Thursday, February 16, 2006
By ROBERT STERN
Staff Writer

Brokerage giant Merrill Lynch & Co., the Princeton region's largest private employer, has agreed to trade its Plainsboro-based investment-management business for a major stake in one of the largest U.S. asset-management companies.

It's unclear if the deal with New York City-based BlackRock Inc. will cost jobs at Merrill Lynch's investment-management division. That division has almost 1,200 of its 2,569 worldwide employees based in Plainsboro, Merrill Lynch spokeswoman Megan Frank said yesterday.

"In terms of layoffs, it's too early to tell," Frank said. "I just know we're going to have a presence in Plainsboro. I don't know how big it's going to be at this point."

Merrill Lynch has reduced its employment in the Princeton area from about 8,000 in 2002 to 6,400 at the end of 2005, primarily at its Hopewell and Plainsboro locations.

It also slashed its global workforce from a peak of 72,000 in 2000 to fewer than 50,000 a couple of years ago.

At the end of last year, Merrill Lynch had 54,600 full-time employees, Frank said.

The company's total Plainsboro employment figure wasn't readily available yesterday, Frank said.

Merrill Lynch is Plainsboro's largest employer, said Mayor Peter Cantu. He said Merrill Lynch's Plainsboro work force has fluctuated in the range of 2,000 to 3,000 over the years, though he didn't have the current number available.

It has been speculated for years that the company would consolidate its Princeton-area work force from its historic base in Plainsboro to a newer corporate campus it built in Hopewell Township.

"Strategically, it appears that Merrill Lynch, from what I've heard, is backing out of Plainsboro and moving as many of its operations as possible down to Hopewell," said commercial real estate broker Aubrey Haines, president of Mercer Oak Realty in Mount Laurel.

"Merrill Lynch and a number of (other) companies in the Route 1 corridor are finding that their center of gravity . . . is further south and west," Haines said.

That's because property and income taxes are lower in Pennsylvania, making riverside towns like Hopewell Township more appealing, from an employee viewpoint, without sacrificing the Princeton sphere of influence that makes central New Jersey so valuable to corporations like Merrill Lynch, Haines suggested.

But Cantu said yesterday he's not "specifically aware" of any plans by the company to reduce its Plainsboro presence.

"We certainly are interested in what impact (the BlackRock deal) would have on Plainsboro employment," Cantu said.

The deal would transform BlackRock into one of the world's top money managers, with an asset base of about $1 trillion and more than 4,500 employees worldwide, according to the two firms.

It wasn't clear yesterday how many current employees of BlackRock or Merrill Lynch's asset-management division will retain their jobs or if additional staff would be hired.

BlackRock spokesman Walter Montgomery did not return repeated telephone calls for comment. On its Web site, BlackRock indicates it has more than 1,560 employees.

Merrill Lynch's asset-management division -- Merrill Lynch Investment Managers (MLIM) -- brings in about 10 percent of the company's earnings, Frank said.

"MLIM is definitely the smallest" Merrill Lynch branch, she said.

Merrill Lynch draws the bulk of its business from its two other divisions -- the global private client group, which also has offices in Plainsboro, and the global markets, investment banking and institutional investments group, she said. Employees in those two divisions won't be affected by the BlackRock deal, Frank said.

The transaction between Merrill Lynch and BlackRock comes as more and more top-tier Wall Street firms are looking to smaller, more specialized competitors for alliances or acquisitions.

Robert Doll, chief investment officer of Merrill Lynch's asset-management business, will become vice chairman and chief investment officer of global equities for BlackRock. Doll, who Frank said will remain in Plainsboro, also is expected to join BlackRock's board.

"The biggest thing now is to execute on our potential," Doll said. "You look on paper, this deal is awesome. But there's a fine line between excellent execution and not-so-good execution, or keeping your client and losing your client."

Merrill Lynch becomes the second major Wall Street firm in less than a year to sell off its asset-management business. In June, Citigroup agreed to swap its asset-management division to Legg Mason Inc. for Legg Mason's broker-dealer operation.

As part of the BlackRock deal, Merrill Lynch Chairman and CEO Stan O'Neal will serve as his firm's designee on the new company's board, along with Gregory Fleming, Merrill Lynch's president of global markets and investment banking.

Merrill Lynch will have a 49.8 percent stake in BlackRock and a 45 percent voting interest in the combined company, which will retain the BlackRock name.

The deal has been approved by the boards of directors of both companies but still requires various regulatory approvals, client consents and approval by BlackRock shareholders, the firms said in a joint announcement.

BlackRock Chief Executive Laurence Fink will be CEO and chairman of the company after the deal. BlackRock President Ralph Schlosstein will remain in his post.

BlackRock shares rose $5.29, or 3.6 percent, to close at $151.25 yesterday on the New York Stock Exchange, while shares of Merrill Lynch rose 14 cents to close at $75.30.

BlackRock and Merrill Lynch are coming off very strong financial performances in 2005.

The Associated Press contributed to this report.