France-based BNP Paribas (FR:BNP) is eyeing a 100% acquisition of AXA Investment Managers, a subsidiary of the French insurance company AXA SA (FR:CS). BNP announced that it is having exclusive discussions with AXA for the acquisition and to establish a long-term partnership to manage a significant portion of AXA’s assets. The acquisition, valued at €5.1 billion in cash, is expected to be completed by mid-2025, pending regulatory approvals.
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BNP shares lost 1.5% as of writing, whereas AXA gained 0.94%.
Based in Paris, BNP Paribas is a banking and financial services company with a presence in 65 countries.
Further Insights into BNP-AXA Acquisition
As part of this acquisition, BNP will acquire around €850 billion worth of assets under management from AXA. The combined business would manage assets worth more than €1.5 trillion, placing it among the top asset managers in Europe.
Speaking of the deal’s rationale, it will significantly strengthen BNP’s asset management division, offering it an opportunity to reduce costs. Additionally, by the third year after the integration is completed, the deal will have an estimated impact of around 25 basis points on BNP’s CET1 (Common Equity Tier 1) ratio. Meanwhile, the expected return on invested capital from the transaction is projected to exceed 18%.
For AXA, the sale is a significant strategic shift, which will allow it to concentrate on its core business areas in insurance. AXA plans to offset the earnings dilution from the proposed sale with a share buyback, estimated at €3.8 billion, set to begin right after the transaction closes.
Is BNP Paribas Stock a Good Buy?
Yesterday, analyst Anke Reingen from RBC Capital reiterated a Buy rating on BNP stock, forecasting 29% upside potential.
According to TipRanks consensus, BNP stock received a Moderate Buy rating based on seven Buy and four Hold recommendations. The BNP Paribas share price target is €81.69, which is 35% above the current trading level.
Year-to-date, BNP stock has lost 4.43% of its value in trading.
