BlackRock agrees to buy Quellos investment arm

BlackRock Inc., the largest publicly traded US mutual-fund company, agreed to buy the investment unit of Quellos Group LLC for as much as $1.7 billion, more than doubling its hedge-fund assets.

BlackRock, which oversees about $1.15 trillion, will pay $562 million in cash and $188 million in stock for the division, which invests clients' money with other fund managers. Owners of closely held Quellos will get additional payments of as much as $970 million over the next 3 1/2 years depending on its fee growth, New York-based BlackRock said yesterday.