Allianz pauses negotiations with Amundi to create a 2.8 trillion euro asset management giant

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According to people familiar with the situation, Allianz has paused talks with Amundi and major shareholder Crédit Agricole over plans to combine its 560 billion euro investment management unit with its larger rival. France.

The two sides have been in ongoing discussions for more than a year and are in exclusive talks to create a European giant with nearly 2.8 trillion euros in assets under management as recently as Saturday morning. Some said talks could continue at a later date.

The disruption illustrates the difficulty of pulling off large-scale mergers and acquisitions in the asset management sector and comes as a wave of consolidation is spreading across the industry, with close deals this includes BNP Paribas’ €5 billion acquisition of Axa Investment Managers to create a €1.5 trillion European business. champion.

The sticking point between Allianz and Crédit Agricole is the structure of any tie-up, according to people familiar with the situation. They struggled to agree on who would have control of an expanded entity.

Amundi, founded in 2010 through the merger of the wealth management divisions of French banks Crédit Agricole and Société Générale, has grown to become Europe’s largest wealth manager, with assets worth 2 million euros. .2 trillion euros and a market capitalization of 13.75 billion euros.

Assuming a valuation of at least 6 billion euros, Allianz Global Investor would be worth half as much as Amundi while owning about a quarter of its assets.

But some people said the German group’s parent insurance company was only willing to accept a transaction that would have given it a co-leading role.

Allianz declined to comment on specifics but told the FT that asset management was “strategically integral” to the group and said Allianz Global Investor was “performing well”.

It emphasized that it would “only consider inorganic growth opportunities that enhance these strengths and increase our exposure to asset management”.

An Amundi spokesperson told the FT on Saturday afternoon: “Amundi is not in discussions with Allianz.” The French group declined to comment further.

Crédit Agricole is Amundi’s largest shareholder with 69% of shares. The asset manager has a free float of 29%. Crédit Agricole did not immediately respond to a request for comment.

For Allianz, a prerequisite for any successful collaboration will be “a common understanding of the partnership at a technical and cultural level,” according to a person familiar with its position.

Others say that while Amundi sees a potential transaction as an “acquisition” of Allianz Global Investor, the Germans want a partnership that would boost income from asset management.

Some in Amundi’s camp envisioned a structure in which Crédit Agricole would remain the controlling shareholder of the enlarged asset management company with a stake of just over 50%. Allianz will then become Amundi’s second largest shareholder with an ownership ratio of about 30% and a freely transferable share ratio of about 20%.

But Germans opposed the structure because they wanted a more balanced division, the people added.

More recently, the two sides appeared to be closer to an agreement. A person familiar with the matter said that Crédit Agricole appeared ready to reduce its holding below 50% to allow Allianz to have a larger stake in Amundi as part of a combination.

At Allianz, some opposition to partnering with Amundi reflected concerns about losing both strategic flexibility and control over its asset management business, while at the same time allowing the French side to receive benefits from cooperation between the two businesses.

Amundi is one of the most profitable companies in the industry and is considered to have excelled in partnering with retail banks to distribute its products.

Investment managers are chasing scale, growth markets and new clients as margins are squeezed by higher costs, lower fees and the entry of large US firms into the market. European school.

Meanwhile, banks and insurers are weighing their commitment to their investment management departments and assessing the value of doubling down, striking a strategic partnership, or giving up business activities.

Earlier this year, Amundi held talks to buy Axa Investment Managers from its parent insurer but was unable to agree terms, according to two people familiar with the situation. In August, Axa announced a 5 billion euro deal to transfer the business to banking group BNP Paribas after concluding that it was small.

France’s Natixis, majority-owned by Groupe BPCE, is also in talks with Italy’s Generali about a possible partnership, the FT reported last month.

According to people close to DWS, Allianz previously held discussions with Germany’s DWS about a potential asset management partnership, but these arrangements no longer exist.