BlackRock to buy Quellos Group unit

BlackRock Inc., the largest publicly traded U.S. mutual fund company, agreed to buy the investment unit of Quellos Group for as much as $1.7 billion, more than doubling BlackRock’s hedge fund assets.

New York-based BlackRock, which manages $1.15 trillion in assets, agreed to pay $562 million in cash and $188 million in stock for the division, which invests clients’ money with other fund managers. Closely held Quellos’ owners would get additional payments of as much as $970 million over the next 3 1/2 years depending on its fee growth.

BlackRock is buying Quellos after completing its acquisition of Merrill Lynch & Co.’s fund unit for $9.7 billion in September.

“This adds another dynamic to BlackRock’s world,” said Geoffrey Bobroff, a money-management consultant in East Greenwich, R.I. “Larger players have much more leverage to gain access to top fund managers and negotiate terms.”