BlackRock Inc. is gaining control of the asset management arm of Merrill Lynch & Co. in a deal that will create one of the world's biggest money managers with $1 trillion in assets, the companies said on Wednesday.

Merrill (MER) will move its Merrill Lynch Investment Managers unit into BlackRock (BLK) and hold a 49.8 percent stake in the combined company, the two said in a joint statement. The deal values MLIM at about $9.5 billion.

BlackRock shares rose 5 percent and Merrill stock edged up about 0.5 percent in early trading.

Founder and Chief Executive Laurence Fink will remain head of BlackRock, which he said will become the world's largest active fixed-income manager. MLIM Chief Investment Officer Bob Doll will become vice chairman and chief investment officer of equities of BlackRock, which will retain its name.

"I've said in the past that mergers generally don't work. But I am a strong believer that this is going to work," said Fink in a call with analysts.

Merrill Chairman and CEO Stan O'Neal said there was no regulatory pressure to separate asset management from the company's broker network. Merrill has acknowledged it had been difficult to sell its mutual funds through third parties, hindering the asset manager's growth.

The deal is expected to close in the third quarter. Merrill will have a 45 percent voting interest in BlackRock, which will be governed by a board with a majority of independent directors, the companies said.

Based on BlackRock's closing stock price on Tuesday, Merrill is expected to report an after-tax gain of about $1.1 billion.

PNC Financial Services Group Inc. (PNC), which owns 70 percent of BlackRock, will see its stake decline to about 34 percent. PNC will record an after-tax gain of about $1.6 billion. The deal is expected to immediately add to PNC's profits and substantially improve the company's cash position, it said.

The strengths of the two companies complement each other. Merrill's assets are mostly in equities and sold through mutual funds while BlackRock is a bond house focused on institutional investors. MLIM had $539 billion in assets, while BlackRock had about $453 billion in assets, as of December 31.

BlackRock shares advanced $7.24 to $153.20 and Merrill stock rose 37 cents to $75.53 on the New York Stock Exchange.