Amundi has announced the signature of a binding agreement with UniCredit in order to acquire Pioneer Investments for a cash transaction of €3.54bn.
As part of the transaction, Amundi will form a long term strategic partnership with UniCredit for the distribution of asset management products.
With the purchase of Pioneer Investments, which had €222bn of assets under management as of end of September 2016, Amundi said it would become the 8th largest asset manager globally with €1.27trn of assets under management.
The transaction will be financed by c.€1.5bn of excess capital, a c.€1.4bn capital increase (rights issue), and c.€0.6bn of senior and subordinated debt.
The rights issue will be launched in H1 2017 and will be underwritten by Crédit Agricole Group. Crédit Agricole Group will support the offering and shall keep a minimum pro forma ownership of 66.7%.
The transaction, which has received the support of both Amundi’s and UniCredit’s boards of directors, is subject to customary closing conditions, regulatory and antitrust approvals. The transaction is expected to close in the first half of 2017.
The transaction aims to reinforce Amundi’s leadership in key European markets.
The combined entity will be number 1 in France, in a top 3 position in Italy and in Austria, and in a strong position in Germany, said the firm while Italy will become Amundi’s second domestic market with €160bn under management, and Milan will become one of the Group’s investment “hubs”.
Also Amundi will benefit from Pioneer’s US platform in terms of management and distribution.
The deal is set to bolster its leadership in serving retail networks and improve its customer mix by increasing the proportion of higher-margin retail customers from 27% currently to 35% post transaction.
The partnership with UniCredit, secured by a 10-year distribution agreement for Italy, Germany and Austria, will allow Amundi to further strengthen its position as preferred provider of savings solutions to retail clients in Europe.
At the same time, UniCredit networks will benefit from Amundi’s expertise of combining an industrial platform with tailor-made and local approaches.
The transaction will expand Amundi’s institutional client base ans will diversify its offering.
Among others, Pioneer will reinforce Amundi’s know-how in various asset classes such as European, US and Emerging Markets equities, multi-asset and US fixed income.
Amundi explained that the transaction should result in full-year pre-tax synergies of approximately c.€180m, fully phased within 3 years: c.€150m of costs synergies are expected to be realised by merging investment platforms, streamlining IT services and by rationalizing administrative and back-office costs; €30m of revenue synergies are expected from potential cross selling and other revenue optimization (brokerage…).
The integration, which cost is estimated at around €190m pre-tax, is expected to be phased-in in 2017 and 2018.
Pioneer’s acquisition is expected to be accretive to Amundi’s earnings per share by c.30%.
Commenting on the acquisition, Xavier Musca, chairman of the board of directors of Amundi, said “This acquisition is fully in line with the selective acquisition strategy announced at the time of the IPO: Pioneer Investments will reinforce Amundi’s product expertise, broaden its distribution channels and networks, and generate significant synergies. It confirms Amundi’s position as a clear European leader in asset management, in terms of size and profitability.”
Yves Perrier, CEO of Amundi, added “The acquisition of Pioneer Investments is a major step to anchor Amundi as the European leader in asset management. This acquisition will reinforce Amundi’s industrial model and will benefit our clients whilst creating significant value for our shareholders.
“Pioneer Investments is a world class asset manager that has a highly complementary business and geographic profile. At Amundi we are all excited to welcome soon our new colleagues who will join us in a leading asset management group fully dedicated to serve its retail and institutional clients.”