Victory Capital (VCTR) to Buy Amundi US Business, Form Alliance

Core Viewpoint - Victory Capital Holdings, Inc. has entered into a definitive agreement with Amundi to merge Amundi's US business with Victory Capital, enhancing its distribution capabilities and product offerings [1][2][3]. Group 1: Transaction Details - The merger will result in Amundi holding a 26.1% economic stake in Victory Capital, with two representatives from Amundi joining Victory Capital's board of directors [2]. - The transaction is expected to close in late Q4 2024 or early 2025 [2]. - Victory Capital will provide US-manufactured active asset management products to Amundi for global distribution, while distributing Amundi's non-US manufactured products in the US [4][12]. Group 2: Financial Impact - The deal is projected to be earnings-accretive, with low double-digit earnings per share growth anticipated within a year of closing [5]. - Approximately $100 million in annual cost savings are expected to be realized within a year of closing, with additional synergies in the following year [5]. - Victory Capital's net leverage ratio is expected to improve significantly post-transaction due to increased cash inflows and no incremental debt [6]. Group 3: Strategic Alignment - This collaboration aligns with Victory Capital's inorganic growth strategy, which has included several acquisitions since 2013 to diversify its product offerings and strengthen distribution channels [3][6]. - The company has previously made strategic acquisitions, including WestEnd Advisors in 2021 and USAA Asset Management Company in 2019, indicating a commitment to expansion [7]. - The CEO of Victory Capital emphasized that this strategic relationship will accelerate the firm's globalization and broaden its investment offerings [13]. Group 4: Market Performance - Over the past six months, Victory Capital's shares have increased by 40.2%, outperforming the industry growth of 8.3% [7].