UniCredit to Begin Talks With Santander on Pioneer Merger

UniCredit SpA will start exclusive talks with Banco Santander SA to combine its Pioneer Global Asset Management SpA with the Spanish lender’s fund business, Chief Executive Officer Federico Ghizzoni said.

UniCredit and Santander plan to merge their asset-management divisions and will each keep one third of the new entity, Ghizzoni told reporters in Milan today. Warburg Pincus LLC and General Atlantic LLC, the two U.S. buyout firms which already own part of Santander’s unit, will own the rest.

“We decided to prefer an industrial partner for Pioneer to create one of the 15 largest asset-management firms in Europe,” Ghizzoni said. “Santander’s unit is perfectly fitting with Pioneer both geographically and in terms of business.” The CEO expects that the deal can be signed by November.

UniCredit, Italy’s biggest bank, is selling assets, cutting costs and reducing risk as part of a plan targeting 2 billion euros ($2.6 billion) of net income this year. The transaction would lift UniCredit’s common equity Tier 1 ratio by 20 to 35 basis points, the CEO said.

The sale may value Pioneer from 2 billion euros to 3 billion euros, according to people familiar with the transaction. The company, to be named Pioneer and based in London, may later merge with an asset manager in Asia or the U.S., said one of the people, adding that UniCredit will receive stock and some cash as part of the transaction. Ghizzoni declined to comment on the value of the deal.

CVC Credit Partners European Opportunities and Advent International Plc submitted lower bids, Ghizzoni said.

Pioneer had assets of 186 billion euros at the end of June, with 2,076 employees in 27 countries. Santander sold half of its asset-management division, which oversees more than 160 billion euros, to New York-based Warburg Pincus and General Atlantic last year.

Ghizzoni said the plan is for the company to hold an initial public offering in coming years.

A spokesman for Santander, Spain’s biggest bank, declined to comment, as did Warburg Pincus’s Ed Trissel and General Atlantic’s Jenny Farrelly.

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