DEFM14A: Victory Capital to Acquire Amundi US in $1.1 Billion Stock Deal

Victory Capital Holdings plans to acquire Amundi US in an all-stock transaction valued at approximately $1.1 billion, expanding its investment offerings and global distribution capabilities.

Summary

• Victory Capital Holdings, Inc. (Victory) has entered into a Contribution Agreement with Amundi Asset Management S.A.S. (Amundi) to acquire Amundi Holdings US, Inc. (Amundi US) in an all-stock transaction.
• Under the agreement, Amundi will contribute all shares of Amundi US to Victory, making Amundi US a wholly-owned subsidiary of Victory.
• In exchange, Victory will issue to Amundi (a) newly issued shares of Victory common stock representing 4.9% of the outstanding shares after the issuance, and (b) newly issued shares of non-voting convertible preferred stock, which together with the common stock, will represent 26.1% of Victory's fully diluted shares.
• A special meeting of Victory stockholders will be held on October 11, 2024, to vote on proposals related to the share issuance, an increase in authorized preferred shares, and a corporate opportunities waiver for Amundi.
• Victory's board of directors unanimously recommends that stockholders vote FOR the share issuance proposal, FOR the authorized preferred share increase proposal, FOR the corporate opportunities proposal and FOR the adjournment proposal.
• The transaction is expected to close in the last quarter of 2024 or early 2025, subject to customary closing conditions, including regulatory approvals and approval of the share issuance by Victory stockholders.
• PJT Partners LP rendered an opinion to Victory's board that the consideration to be paid by Victory for the Amundi US Shares was fair to Victory from a financial point of view.

Sentiment

Score: 7

Explanation: The document is generally positive, highlighting the strategic benefits of the acquisition and the unanimous recommendation of the board. However, it also acknowledges potential risks and challenges, resulting in a moderately positive sentiment score.

Positives

• The acquisition broadens Victory's investment offerings with new and complementary investment capabilities.
• The transaction is expected to achieve near-term cost synergies.
• Victory's leverage ratio is expected to improve following the closing.
• The transaction is expected to be earnings per share accretive.
• The transaction is expected to result in larger and broader U.S. distribution sales and marketing efforts.
• The distribution and services agreement is expected to create a new distribution channel outside the United States.

Negatives

• The share issuance will dilute the ownership and voting interests of existing Victory stockholders.
• Victory will incur significant transaction-related costs.
• There are potential difficulties in retaining client assets and key personnel.
• Victory may not receive all of the anticipated benefits from transactions contemplated under the distribution and services agreements with Amundi.

Risks

• Victory and Amundi may fail to consummate the transaction if certain required conditions are not satisfied.
• Victory may fail to realize the anticipated benefits of the transaction and may assume unanticipated liabilities.
• The failure of Amundi US to obtain certain third-party consents and approvals could adversely impact Victory and Amundi US following the contribution.
• Victory's due diligence of Amundi US may have failed to identify key risks.
• If Amundi were to sell all or a material number of the shares issued to it pursuant to the share issuance, the market price of Victory's common stock could be negatively impacted.
• Integrating the businesses of Amundi US into Victory may be more difficult, costly and time-consuming than expected.

Future Outlook

Victory and Amundi currently expect closing to occur during the last quarter of 2024 or in early 2025.

Management Comments

• Victory's board of directors has unanimously determined that the transactions contemplated by the contribution agreement are fair to and in the best interests of Victory and its stockholders.

Industry Context

The acquisition reflects a trend of consolidation in the asset management industry, with firms seeking to expand their investment capabilities and distribution networks to compete more effectively in a global market.

Comparison to Industry Standards

• The document does not contain specific details listing specific comparable companies, projects, and results.
• The document mentions PJT Partners LP relied on, among other things, internal forecasts relating to Victory and Amundi US and cost savings and operating synergies projections each provided to PJT Partners by management of Victory.

Stakeholder Impact

• Existing Victory stockholders will experience dilution of their ownership and voting interests.
• Amundi will gain a significant ownership stake in Victory and board representation.
• Clients of both Victory and Amundi US may benefit from expanded investment offerings and distribution capabilities.
• Employees of Amundi US will become employees of Victory, with certain protections regarding compensation and benefits.

Next Steps

• Victory stockholders will vote on the share issuance proposal, the authorized preferred share increase proposal, the corporate opportunities proposal and the adjournment proposal at a special meeting on October 11, 2024.
• Victory and Amundi will work to obtain required regulatory approvals.
• Victory and Amundi will work to obtain client consents for the assignment of investment advisory agreements.

Key Dates

Keywords

Amundi, Victory Capital, acquisition, asset management, share issuance, proxy statement, Amundi US, preferred stock, stockholders, investment