Barclays will sell 26.2 million BlackRock shares at $160.00 per share, a 2 percent discount from its Tuesday closing price of $163.37 on the New York Stock Exchange.

BlackRock will buy back 6.4 million shares for $1 billion, the company said in a statement.

If underwriters exercise the option to buy an additional 2.6 million in BlackRock shares, Barclays will have completely sold off an interest it has held for nearly three years.

Barclays' 19.6 percent stake came as part of BlackRock's $15 billion purchase of Barclays Global Investors in 2009, which was seen as a good deal for the bank at the time.

However, Basel III regulations mean banks now have to hold more capital against minority stakes in asset managers and other firms, making it less profitable.

BlackRock shares were down 2 percent after the bell at $159.80.