Amundi to buy UniCredit’s Pioneer for $3.7bn

Bloomberg

Amundi SA agreed to buy Pioneer Investments from Italy’s UniCredit SpA, accelerating the French investment company’s growth in the US 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, Italian bank said in 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 US 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 US,” and should provide Amundi with access to UniCredit’s retail clients in Europe, he said.
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 rose as much a 7.8 percent percent in Paris, the highest since their IPO in November 2015, while Credit Agricole gained 1.1 percent to trade at 11.63 euros as of 9:20 a.m. UniCredit added as much as 4 percent in Milan trading and was up 2.8 percent at 2.57 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% 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.
Pioneer draws its origins from one of the oldest US 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.