French fund management company Amundi (AMUN.PA) is to buy asset manager Pioneer from Italian bank UniCredit (CRDI.MI) for 3.55 billion euros ($3.75 billion), and will finance the deal with a debt and equity issue.
The deal is one of various disposals being pursued by newly-appointed UniCredit Chief Executive Jean-Pierre Mustier to boost capital levels at the Italian lender, slim it down and make it easier to manage.
For Amundi, which is majority owned by French bank Credit Agricole (CAGR.PA), the acquisition of Pioneer will strengthen its market-leading position in Europe, result in cost-savings and boost Amundi’s earnings.
“Pioneer Investments will reinforce Amundi’s product expertise, broaden its distribution channels and networks, and generate significant synergies,” said Amundi Chairman Xavier Musca in a statement.
“It confirms Amundi’s position as a clear European leader in asset management, in terms of size and profitability,” he added.
After the deal Amundi will have 1.276 billion euros of assets under management, making it the eighth largest asset manager in the world, Amundi said.
UniCredit said the sale of Pioneer would boost its best-quality capital ratio by around 78 basis points, while UniCredit would also receive an extraordinary dividend payment of 315 million euros before the closing of the sale, which is expected in the first half of 2017.
UniCredit also said it would book a net capital gain of 2.2 billion euros from the Pioneer sale.
Amundi said it would fund the Pioneer acquisition via a 1.4 billion capital increase and around 0.6 billion euros of senior and subordinated debt, with the rights issue to be launched in the first half of 2017.
Credit Agricole will underwrite that rights issue, and Credit Agricole added that the Pioneer deal was expected to boost its earnings per share by more than five percent.
($1 = 0.9467 euros)