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Blackrock Buying Quellos FoF

NEW YORK (AP) – Investment management company BlackRock Inc. said Tuesday it is buying the fund of funds division of Quellos Group LLC for up to $1.7 billion.

The deal, set to close around Oct. 1, will create a fund of funds operation with more than $25.4 billion in managed assets. A fund of funds is a mutual fund that invests in other mutual funds.

Quellos will receive $562 million in cash and $188 million in BlackRock stock. The company may also receive up to $970 million in cash and stock over three and a half years, dependent on certain unspecified criteria.

The fund of funds operation will be branded as BlackRock Alternative Advisors and be led by BlackRock Chief Investment Officer Bryan White.

Quellos CEO Jeffrey Greestein said he plans to retire but will work as a BlackRock adviser, temporarily. will become global head of BlackRock Alternative Advisors.

Last October, BlackRock completed its merger with Merrill Lynch & Co.'s money-management arm. As of March 31, 2007, assets under management totaled $1.154 trillion.