(Reuters) — French asset manager Amundi (AMUN.PA) has agreed to buy rival Pioneer Investments from Italian bank UniCredit CRDI.I for 3.6 billion euros ($3.8 billion), extending its reach in Europe and bringing in some much-needed capital for UniCredit.
Amundi’s share price surged more than 6 percent to record highs following the announcement, as analysts welcomed the deal, which should boost earnings for both Amundi and majority owner Credit Agricole (CAGR.PA), while UniCredit shares also rose.
The Pioneer sale follows on the heels of UniCredit’s sale of its Polish assets last week and is expected to be followed by the announcement of a massive share issue this week worth up to 13 billion euros as it seeks to shore up its balance sheet.
“The deal is a positive for all the parties involved. UniCredit raises some money and Amundi boosts its market presence,” said Clairinvest fund manager Ion-Marc Valahu, who holds shares in European banks.
UniCredit’s chief executive Jean-Pierre Mustier, a former top banker at Societe Generale (SOGN.PA) who along with Amundi’s CEO Yves Perrier managed the creation of the French asset manager back in 2009-2010, also signed an agreement that gives Amundi access to UniCredit’s distribution networks in Italy, Germany and Austria for up to 10 years.
Amundi will finance the deal via a 1.4 billion share issue and the issue of around 0.6 billion euros of senior and subordinated debt, with the rights issue to be launched in the first half of 2017. It also has 1.5 billion euros in excess capital.
UniCredit said the sale of Pioneer would boost its best-quality capital adequacy ratio by around 0.78 percentage points and it 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.
The sale would also result in it booking a net gain of 2.2 billion euros, the bank said.
Amundi is on an expansion spree following its stock market flotation by French banks Credit Agricole and SocGen in 2015, which resulted in SocGen selling out, and the company is aiming to win market share in Europe and Asia.
It also marks the first significant expansion deal for Credit Agricole, which had recently been focusing more on its retail banking roots in French and Italy, and on reducing its balance sheet.
“Pioneer Investments will reinforce Amundi’s product expertise, broaden its distribution channels and networks, and generate significant synergies,” Xavier Musca, who is both Amundi’s chairman and Credit Agricole’s deputy CEO, said 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.
Credit Agricole said that the Pioneer deal was expected to boost its earnings per share by more than 5 percent.