By Giovanni Legorano
MILAN-- UniCredit SpA and Banco Santander SA have reached
preliminary agreement on a deal to merge their asset management
units and combine all activities of the two money managers, the
Italian lender said.
The merger will see the creation of a holding company retaining
UniCredit's Pioneer Investments brand, which will be 50%-owned by
UniCredit and 50%-owned by private-equity firms Warburg Pincus LLC
and General Atlantic LLC. The two private-equity firms together
currently own 50% of Santander Asset Management.
The newly created holding company will own stakes in two units.
One will comprise Pioneer's U.S. business, which the holding
company will control completely. The other unit will consist of
Pioneer and Santander Asset Management's non-U.S. businesses, of
which the holding company will own two-thirds. The remaining third
will be owned by Santander.
The deal includes a 1.1 billion euro ($1.18 billion) cash
payment to UniCredit from Santander and the two private-equity
funds, a person familiar with the matter said.
The company resulting from the merger will have an enterprise
value of around EUR5.5 billion and will have EUR400 billion in
assets under management.
According to a person familiar with the matter, Santander won't
be a shareholder of the main holding company to avoid a rejection
of the deal by U.S. regulators following the Spanish bank's failure
of the U.S. Federal Reserve's stress tests last year.
The person said that following the failure of the test, U.S.
regulators may haven't permitted a growth of Santander's overall
U.S. business. If Santander owned a stake in the top holding
company, it would have become a shareholder in Pioneer's U.S.
business.
"Santander is currently reinforcing the group's structure in the
United States with the creation of a holding company, with its own
management team, to which all the group's businesses in the country
will report," a spokesperson said. "With all these changes under
way, including strengthening the management team and improving
corporate governance, the group doesn't think this is the time to
add new businesses to the mix in the U.S."
The Fed, which oversees banks in the U.S., didn't immediately
reply to a request for comment. UniCredit declined to comment.
UniCredit's estimates that the deal will add around 25 basis
points to its common equity Tier 1 ratio, which is a regulatory
measure of banks' capital strength.
Write to Giovanni Legorano at giovanni.legorano@wsj.com
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