Amundi Agrees to Buy UniCredit’s Pioneer for $3.7 Billion

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  • Purchase to make Amundi eighth-biggest global asset manager
  • Pioneer manages about 222 billion euros in assets for clients

Amundi SA agreed to buy Pioneer Investments from Italy’s UniCredit SpA, accelerating the French investment company’s growth in the U.S. and European markets including Germany and Austria.

Amundi will pay about 3.5 billion euros ($3.7 billion) in cash, the Paris-based company controlled by Credit Agricole SA said in a statement on Monday. It will pay for the purchase with a combination of a 1.4 billion-euro capital increase, about 600 million euros of senior subordinated debt and about 1.5 billion in existing capital. UniCredit will get an extraordinary dividend of 315 million euros from Pioneer before the deal is completed, the Italian bank said in a separate statement.

The purchase of Pioneer, which oversees about 222 billion euros in assets, will give Amundi more than $1.3 trillion under management, making it the world’s eighth-largest asset manager, the company said. Chief Executive Officer Yves Perrier has said he wants the company to be a European competitor to U.S. giants like BlackRock Inc., the firm Larry Fink built into the world’s biggest money manager.

“Amundi is moving up another notch in the global rankings,” said Alexandre Blondel, a Paris-based director specializing in financial services at business adviser Equinox-Cognizant. Pioneer’s presence is “significant in the U.S.,” and should provide Amundi with access to UniCredit’s retail clients in Europe, he said.

Agricole Support

The transaction is expected to close in the first half of 2017. Credit Agricole SA will underwrite the rights offer and pledged to keep a stake of at least 66.7 percent in Amundi. The purchase is consistent with Credit Agricole’s 2020 strategic plan and should provide a return on investment of at least 10 percent within three years, while adding more than 5 percent to the parent’s earnings per share after synergies and excluding restructuring costs, the French bank said.

Amundi CEO Perrier expects job cuts of “a bit less” than 10 percent of the combined company, or about 450 people, while some people will need to be added for development projects. In Milan, which will become one of Amundi’s global investment hubs, the company plans to double headcount to about 600 people at the end of the integration, he said.

Amundi rose as much a 8.5 percent percent to 51.43 euros in Paris, the highest since its initial public offering in November 2015, while Credit Agricole gained 1.1 percent to trade at 11.63 euros as of 1:40 p.m. UniCredit added as much as 4.4 percent in Milan and was little changed at 2.51 euros.

Amundi expects about 150 million euros in full-year cost synergies within three years as it merges investment platforms and streamlines support functions while it sees revenue rising by 30 million euros. Amundi will book 190 million euros of one-time costs over the next two years to carry out the integration, it said. The acquisition should increase Amundi’s earnings per share by about 30 percent within three years.

The purchase “will reinforce Amundi’s product expertise, broaden its distribution channels and networks, and generate significant synergies,” Amundi Chairman Xavier Musca said in the statement. “It confirms Amundi’s position as a clear European leader in asset management.” Musca is also deputy chief executive officer of Credit Agricole.

Long History

Pioneer draws its origins from one of the oldest U.S. mutual funds, created in 1928 by Philip L. Carret, a financial reporter at business weekly Barron’s. In the 1960s, Pioneer was among the first American funds to start doing business in Italy and Germany. It has a staff of about 2,000 people, with a presence in 28 countries and global hubs in Boston, Dublin and London. North America represents 18 percent of Pioneer’s assets under management, compared to less than 3 percent at Amundi.

For UniCredit, the disposal of Pioneer after 16 years of ownership is a key piece of its efforts to bolster capital and restore investor confidence. The Milan-based lender expects a net capital gain of 2.2 billion euros next year from the disposal, lifting its common equity Tier 1 ratio by 78 basis points, according to its statement. The company is scheduled to release a strategic plan on Tuesday.

Last week UniCredit agreed to sell a stake in Bank Pekao SA of Poland. Two state controlled Polish companies bought a 32.8 percent stake for about $2.6 billion and it sold the remaining 7.3 percent stake on the market.

UniCredit Slimming

The sell-offs under new Chief Executive Officer Jean Pierre Mustier come after Italy’s biggest bank by assets emerged from the latest European stress tests with the slimmest capital margin among those deemed important to the financial system.

Amundi, created in 2010 when Credit Agricole and Societe Generale SA combined their asset-management businesses, went public last year to fund its international expansion as Societe Generale sold its stake.

Mediobanca SpA, Goldman Sachs Group Inc. and Credit Agricole CIB were Amundi’s financial advisers on the transaction, while JPMorgan Chase & Co., Morgan Stanley and UniCredit’s corporate and investment-banking unit advised the seller.

— With assistance by Chiara Remondini

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