Generali Snaps Up Axa’s Greek Assets For €165M; Street Says Hold

Assicurazioni Generali announced on Thursday that it has signed an agreement to buy all of the shares currently owned by AXA’s Greek subsidiary AXA Insurance S.A. for a total of €165 million.

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The transaction price tag is equivalent to a multiple of 12.2 times 2019 earnings, subject to closing adjustments. The deal is part of Generali’s (0K78) strategic plan to boost its exposure to non-life and health businesses in Europe in general, and to secure a leading role in the Greek insurance market, in particular.

As part of the deal, Generali has also renegotiated the distribution agreement currently in place between AXA Greece and Alpha Bank expiring in March 2027 by extending it for 20 years from the closing of the acquisition. AXA Greece distributes its products mainly through Alpha Bank and a network of more than 600 agents. Alpha Bank is one of the leading banks in Greece, serving about 3.1 million customers through a network of 347 bank branches.

“With the purchase of AXA Greece and the exclusive long-term distribution agreement with Alpha Bank, Generali decidedly strengthens its position in the local market, becoming the second largest group in the non-life and the third in the health sector in Greece” commented Generali International CEO Jaime Anchústegui Melgarejo. “The transaction will enable us to optimize our strategic positioning in the country, allowing for a multi-channel, dynamic business and securing valuable, significant economies of scale for a more effective and efficient overall operation.”

In 2019, AXA Greece posted total gross insurance premiums of about €168 million.

Meanwhile, Generali has been active in Greece since 1886 and is the sixth largest insurer in the country, with a 5.3% market share. Generali offers non-life, health and life insurance products to more than 305,000 clients across Greece. In 2019, total gross premiums written amounted to about € 218 million. (See Generali stock analysis on TipRanks)

Earlier this month, UBS analyst Colm Kelly raised the stock’s price target to €13.50 from €12.50 and maintained a Hold rating on the shares.

The rest of the Street is in line with Kelly’s outlook. The Hold analyst consensus shows 3 Holds and 2 Sells versus 3 Buys. With shares down 22% this year, the average analyst price target of €15.40 indicates upside potential of 7% over the coming year.