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Allianz has paused talks with Amundi and its majority shareholder Crédit Agricole over plans to merge its 560 billion euro investment management arm with its larger French rival, according to people familiar with the situation.
The two sides have been in off-and-on talks for more than a year, and were in exclusive talks about setting up the European giant with nearly 2.8 trillion euros in assets under management as recently as Saturday morning. Some of the people said the talks could resume later.
The break illustrates the difficulty of pulling off big mergers and acquisitions in asset management and comes as a wave of consolidation sweeps the industry, with recent deals including BNP Paribas’ €5bn acquisition of Axa Investment Managers to create Europe’s €1.5bn champion.
A key point of contention between Allianz and Crédit Agricola was the structure of any tie-up, according to people familiar with the situation. They agonized over who would have control over the enlarged entity.
Amundi, which was created in 2010 through the merger of the asset management arms of French banks Crédit Agricole and Société Générale, has grown to become Europe’s largest asset manager, with €2.2 trillion in assets and a market capitalization of €13.75 billion.
Assuming a valuation of at least 6 billion euros, Allianz Global Investors would be worth about half as much as Amundi, while having about a quarter of its assets.
But the German group’s parent insurer was only willing to accept a transaction that would give it a co-leading role, some of the people said.
Allianz declined to comment on specifics, but told the FT that asset management was a “strategic component” of the group and said Allianz Global Investors was “doing well”.
He emphasized that “we will only consider inorganic growth opportunities that enhance these strengths and increase our exposure to asset management.”
An Amundi spokesman told the FT on Saturday afternoon: “Amundi is not negotiating with Allianz.” The French group declined to comment further.
Crédit Agricole is the largest shareholder of Amundi with a 69 percent stake. The asset manager has 29 percent free float. Crédit Agricole did not immediately respond to a request for comment.
For Allianz, a prerequisite for any successful merger would be “a shared understanding of the partnership at a technical and cultural level,” according to one person familiar with its position.
Others said that while Amundi saw the potential transaction as an “acquisition” of Allianz Global Investors, the Germans wanted a partnership that would help boost revenue from asset management.
Some people in Amundi’s camp envisioned an organization in which Crédit Agricole would remain the controlling shareholder of the enlarged asset manager with a stake just above 50 percent. Allianz would then become Amundi’s second-largest shareholder with a stake of around 30 percent and roughly 20 percent in free trade, people familiar with the situation said.
But the Germans rejected this structure because they wanted a more balanced division, the people added.
Recently, the two sides appeared to be inching closer to an agreement. A person familiar with the matter said Crédit Agricole appeared ready to reduce its stake below 50 percent to allow Allianz to hold a larger stake in Amundi as part of the combination.
Within Allianz, some opposition to a tie-up with Amundi reflects concerns about losing strategic flexibility and control over the 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 believed to have excelled in striking tie-ups with retail banks to distribute its products.
Investment managers gravitate to size, emerging markets and new clients as margins are squeezed by higher costs, lower fees and the encroachment of large US firms into the European market.
Meanwhile, banks and insurers are weighing their commitment to their investment management divisions and evaluating the merits of doubling down, entering into strategic partnerships or exiting the business.
Earlier this year, Amundi was in talks to buy Axa Investment Managers from its parent insurer but failed to agree terms, according to two people familiar with the situation. In August, Axa announced a deal worth 5 billion euros to transfer the business to banking group BNP Paribas after concluding that it was a smaller amount.
France’s Natixis, which is majority-owned by Groupe BPCE, is also in talks with Italy’s Generali about a potential tie-up, the FT reported last month.
Allianz has held talks with Germany’s DWS in the past about a potential asset management tie-up, but they are no longer active, according to people close to DWS.
