BNP Paribas in Exclusive Talks for $5.52 Billion Deal for AXA's Investment-Management Arm — Update

By Adria Calatayud

BNP Paribas entered into exclusive talks to buy the investment-management arm of insurer AXA and reach a long-term partnership for 5.1 billion euros ($5.52 billion), in a deal that would create a European asset-management giant.

The proposed transaction would bulk up BNP Paribas's investment-management operations and mark AXA's exit from asset management.

The French bank said Thursday that the newly formed business would oversee assets amounting to EUR1.5 trillion and become a leading European player in the sector.

AXA IM has EUR850 billion in assets under management and the acquisition would strengthen BNP Paribas's position in the management of long-term savings assets for insurers and pension funds, the bank said.

The deal, and its proposed price, also contemplate a long-term partnership under which BNP Paribas would manage a large part of AXA's assets. BNP Paribas President and Chief Executive Jean-Laurent Bonnafé called the partnership the cornerstone of the project.

BNP Paribas anticipates an effect to its CET1 ratio--a gauge of banks' financial strength--of 25 basis points and a return on invested capital topping 18% in the third year after the acquisition, once the integration process is completed.

AXA said the decision to exit asset management by selling AXA IM aims to simplify its business model and sharpen its focus on its core insurance activities.

"We intend to offset the resulting earnings dilution with a share buyback, and we are affirming the key financial targets of our new strategic plan," AXA Chief Executive Thomas Buberl said.

The signing of the proposed transaction is expected by the end of the year, but remains subject to consultations with employee-representative bodies, the companies said. The deal would close by mid-2025, they added.

News of the exclusive negotiation meant AXA moved forward the publication of its half-year results, which showed an increase in net profit that beat analysts' expectations thanks to growth in gross written premiums and other revenue.

Alongside the results and the AXA IM sale, the insurer said it agreed to acquire smaller Italian peer Gruppo Nobis for EUR423 million. Nobis focuses predominantly on the property-and-casualty segment and had gross written premiums of about EUR500 million last year.

Write to Adria Calatayud at adria.calatayud@wsj.com

(END) Dow Jones Newswires

August 01, 2024 14:10 ET (18:10 GMT)

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