Unicredit, Banco Santander and US private equity funds Warburg Pincus and General Atlantic will be partners in a new asset management group where activities in the sector by both banks will be merged. The del will be signed next November while the closing is expected in the first months of 2015.
The announcement of the deal was made yesterday afternoon by Unicredit’s ceo Federico Ghizzoni at a press conference following a meeting of Unicredit’s Board of Directors. “The decision is to negotiate from today on with Santander only. We are in exclusive talks”, Ghizzoni said.
Under the proposed deal, Santander Asset Management will combine with Unicredit’s Pioneer unit, with both banks owning about a third each of the new company, Warburg Pincus and General Atlantic, which are already partners in Santander Asset Management, will together take the remaining third of the merged entity,
The orojected sale of a 50% stake in Pioneer’s capital was then trasformed in a more complex plan for Unicredit. Ghizzoni actually explained: “We started all the process thinking of a sale to a private equity fund but then an industrial opportunity took shape thanks to Santander’s offer and we agreed that was a good idea: the decision to choose an industrial partner will take us to bew partners in a group with 350 billion euros of assets under management, which will be among the first 15 am houses in Europe and among the first 25-30 houses in the World”.
At the of last July Ghizzoni, advised on the deal by Morgan Stanley and Bofa Merrill Lynch, received three proposals: the one from Span’s Banco Santander (advised by Ubs) together with Warburg Pincus and General Atalntic; the one by US private equity operator Advent International (supported by Goldman Sachs and Mediobanca); and the one by private equity operator CVC Capital Partners (advised by Deutsche Bank) together with GIC -The Government of Singapore Investment Corporation, a sovereign fund of Singapore (see a previous post by BeBeez).
Ghizzoni gave no financial details about the planned tie-up, only saying Santander had offered a “better price” than the two other bidders for Pioneer. Word in the market is that the offer valued Pioneer as far as 2.7-3 billion euros that is to say 10-11x Pioneer’s expected ebitda for 2014 of 270 millions, while the two funds’ offers where more in line with a 9-10x ebitda evaluation. The price takes into consideration expected sinergies coming from the geographic and business fit of the two groups and the powerful distribution capacity of a global network made of 21,000 branches in Europe, US and Latin America.
In the medium term the new am group will be listed on the Stock Exchange in order to allow the two private equity funds to divest while Unicredit and Santander will remain as important shareholders. That will be a come back on the listed market for Pioneer as it was delisted from Nasdaq by Unicredit back in 2000 after a takeover bid at 43.50 dollars per share for a total consideration of 1.2 billion dollars.
