Aberdeen Drops Pioneer Bid Saying $3.7 Billion Tag Too High

  • Asset manager withdrew after reaching second round, CEO says
  • Aberdeen interested in more deals, cites lack of opportunities

Aberdeen Asset Management Plc abandoned a bid for UniCredit SpA’s Pioneer Global Asset Management SpA because the 3.5-billion euro ($3.7 billion) price was too high, Aberdeen Chief Executive Officer Martin Gilbert said.

"We were through to the second round but we withdrew," Gilbert said Monday in an interview in Dubai. "We couldn’t quite afford the 3.5 billion that it’s going to go for. I wish we could find something, but there’s nothing at the moment."

Bidders for Pioneer, which manages about 220 billion euros, include Amundi SA and a group that includes Poste Italiane SpA, Anima Holding SpA and Cassa Depositi e Prestiti SpA. Macquarie Group Ltd. and Ameriprise Financial Inc. also made offers, a person familiar with the matter has said.

UniCredit CEO Jean Pierre Mustier is trying to restore confidence in the systemically important lender after a slide in share price eroded more than half the company’s market value this year. As well as selling Pioneer, the bank is considering raising capital in as part of a business plan to be revealed in December. The stock down 1.9 percent at 1.95 euros as of 10:39 a.m. in Milan trading, on track for a fifth straight day of declines.

Gilbert, under pressure after more than two years of outflows from the firm’s emerging-markets funds, said being independent is a "massive advantage" for the asset manager.

"The wealth managers are massive clients of ours -- the fact we’re not owned by anyone means we can deal with them all," Gilbert said on a visit to the United Arab Emirates to open an office in Abu Dhabi. "I keep encouraging banks to sell their asset-management subsidiaries to us and we’ve bought a lot."

Aberdeen purchased Scottish Widows Investment Partnership from Lloyds Banking Group Plc for 560 million pounds ($692 million) in 2014.

Sovereign Funds

Funds tied to local governments in the Middle East are struggling amid national budget deficits as oil price declines, with most oil companies having to adjust their costs to the context, Gilbert said. Governments will have to "look at their budget deficits and really look at how they run their economy," he added, citing Saudi Arabia as an example of where adjustments are being implemented at the moment.

The decline in the price of the commodity has had a direct impact on the share of sovereign wealth funds represented within Aberdeen’s client portfolio, according to Gilbert.

"Our last set of numbers showed that our sovereign-wealth funds have fallen from 10 percent of assets under management to about 3 percent,” he said. “So you can see the effect that low oil prices are having on our business and other asset managers."

— With assistance by Desley Humphrey, and Manus Cranny

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