Amundi in exclusive talks with Société Générale to acquire Lyxor
French asset manager Amundi has announced on Wednesday that it has entered into exclusive negotiations with Société Générale for the acquisition of Société Générale's asset management business Lyxor. The transaction is valued at a total cash consideration of €825m, or €755m excluding excess capital. State Street and DWS were also said to be interested by the takeover of Lyxor.
Société Générale said the acquisition would cover Lyxor's passive (ETFs) and active (including alternative) management activities for institutional clients in France and abroad. The scope of the transaction would include the sales and support functions dedicated to these activities. Lyxor, established in 1998 and managing €124bn in assets as of end 2020, is a key player of the ETF market, especially in Europe, where it holds a 7,4% market share making it the third most important ETF player in the region as at end 2020. Through the acquisition, Amundi would become number two in the European ETF market with combined assets of €142bn and a 14% market share, said Crédit Agricole's asset management subsidiary in a statement.
It is understood that certain activities from Lyxor are excluded from the scope of the transaction and retained by Société Générale. That includes structured asset management solutions intended for Société Générale's global markets clients and asset management activities dedicated to savings solutions and carried out for Société Générale (Branch networks and Private Banking) such as structuring of saving solutions, funds selection and the supervision of the Société Générale Group's asset management companies.
In addition, Société Générale unveiled the future establishment of a "Wealth & Investment Solutions" department within its private bank. It explained this department would serve as a centre of expertise to structure savings, asset management and investment solutions for the group's private banking and retail banking networks, as well as structured asset management solutions for global markets clients. The new unit would include Lyxor's teams, which would not be part of the disposal project. “The partnership agreements with Amundi for the provision of savings and investment solutions for Societe Generale's networks are maintained. Societe Generale will also continue to support Amundi through its comprehensive and flexible range of market solutions and securities services,” said the group.
Completion of the deal by February 2022
The transaction is expected to be completed by February 2022 at the latest, after consultation of the Works Councils, and subject to receiving the required regulatory and anti-trust approvals. Amundi estimates that provided the high synergy potential, the acquisition of Lyxor would be significantly value accretive. That includes an enterprise value representing a P/E 2021e multiple of around 10x8, including run-rate cost synergies only; approximatively +7% accretive on Amundi’s EPS 2021e, including run-rate cost synergies only as well as a return on investment exceeding 10% in year 3 after completion including run-rate cost synergies only.
Commenting on the exclusive talks, Yves Perrier, chief executive officer of Amundi, said, “The acquisition of Lyxor will accelerate the development of Amundi, as it will reinforce our expertise, namely in ETF and alternative asset management, and allows us to welcome highly recognised teams of people. This acquisition is fully in line with the Crédit Agricole group’s reinforcement strategy in the asset gathering business. It will also further reinforce the business relationships with our historical partner Société Générale. Finally, by creating in France the European leader in passive asset management, it will contribute to the post-Brexit positioning of the Paris financial centre.”
Valérie Baudson, deputy chief executive officer of Amundi and set to replace Perrier as CEO after the firm's general meeting on 10 May, added: “We are glad and are looking forward to welcoming the talented teams of Lyxor. The combinations of our strengths will allow us to accelerate our development in the ETF, alternative asset management and the investments solutions segments.”