Allianz suspends talks with Amundi to form €2.8trn asset management giant

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Allianz Group AG has suspended talks with Credit Agricole SA and its top shareholder Crédit Agricole SA on plans to merge its 560 billion euro investment management unit with its larger French rival, according to people familiar with the matter.

The two sides have been discussing it on and off for more than a year and on Saturday morning entered into exclusive talks to form a European giant with nearly 2.8 trillion euros in assets under management. Some said talks could resume later.

The disruption illustrates the difficulty of large-scale mergers and acquisitions in asset management and comes as a wave of consolidation sweeps the industry, with recent deals including BNP Paribas’ €5 billion acquisition of Axa Investment Managers to create 1.5 European Corporate Champion for 1 trillion euros.

A key sticking point between Allianz and Credit Agricole will be the structure of any collaboration, people familiar with the matter said. They have been trying to agree on who will control the enlarged entity.

Amundi was founded in 2010 through the merger of the asset management arms of Crédit Agricole and Societe Generale. It has grown into Europe’s largest asset management company, with assets of 2.2 trillion euros and a market capitalization of 13.75 billion euros.

Assuming a valuation of at least €6 billion, Allianz Global Investors is valued at about half that of Crédit Agricole, while its assets are about a quarter of Crédit Agricole’s.

But some people familiar with the matter said the German group’s parent insurer was only willing to accept a deal that would give it a shared leadership role.

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

It stressed that “only inorganic growth opportunities that enhance these strengths and increase our asset management business will be considered.”

A spokesman for Amundi told the Financial Times on Saturday afternoon: “Amundi is not in discussions with Allianz.” The French group declined to comment further.

Crédit Agricole is the largest shareholder of Credit Agricole, holding 69% of the shares. The asset manager has a free float of 29%. Credit Agricole did not immediately respond to a request for comment.

A person familiar with the matter said that for Allianz, a prerequisite for any successful cooperation is “a common understanding of the partnership at a technical and cultural level”.

Others said that while Crédit Agricole viewed a potential deal as an “acquisition” of Allianz Global Investors, the German wanted a partnership to help boost its asset management revenue.

Some in the Amundi camp had envisaged that Crédit Agricole would remain the controlling shareholder in the enlarged asset manager, with a stake of just over 50%. People familiar with the matter said that Allianz Group will become the second largest shareholder of Credit Agricole by then, with a shareholding ratio of approximately 30% and a free float ratio of approximately 20%.

But people familiar with the matter added that Germans are opposed to such a structure because they want a more balanced split.

Recently, the two sides appeared to be closer to a deal. Credit Agricole appears ready to dilute its stake below 50% so that Allianz can take a larger stake in Amundi as part of a merger, a person familiar with the matter said.

Within Allianz, some are opposed to the Amundi tie-up, reflecting concerns about losing strategic flexibility and control of its asset management business while allowing the French side to benefit from synergies between the two businesses.

Amundi is one of the most profitable players in the industry and is considered adept at forming partnerships with retail banks to distribute its products.

Investment managers are pursuing scale, growth markets and new clients as margins are squeezed by rising costs, lower fees and the push of large U.S. companies into European markets.

At the same time, banks and insurance companies are weighing their commitments to their investment management units and assessing the merits of doubling down on efforts, entering into strategic partnerships or exiting the business.

Earlier this year, Credit Agricole was in talks to buy AXA Investment Management from its parent insurance company but was unable to agree on terms, according to two people familiar with the matter. In August, Axa announced a €5 billion deal to sell the business to BNP Paribas after deciding the business was small.

France’s Natixis, majority-owned by BPCE Group, is also in talks with Italy’s Generali about potential cooperation, the Financial Times reported last month.

Allianz has held discussions with Germany’s DWS about potential asset management cooperation in the past, but those discussions are no longer ongoing, according to people close to DWS.