France’s BPCE Offers to Buy Out Natixis to Boost Control

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France’s BPCE Offers to Buy Out Natixis to Boost Control

Jan-Henrik Förster, Dinesh Nair and Alexandre Rajbhandari

(Bloomberg) -- French financial group BPCE SA offered to buy out minority shareholders in listed investment banking unit Natixis SA, seeking greater control over the securities business after a series of missteps hurt its reputation and dented profit.

BPCE is offering 4 euros per share to acquire the 30% it doesn’t own in Natixis, above the closing price of 3.70 euros on Monday. Trading in Natixis was suspended on Tuesday after Bloomberg reported that BPCE was planning to announce the offer as soon as this week. The stock was up 7.5% to 3.98 euros as of 9:06 a.m. local time on Wednesday after trading resumed.

The takeover would seek to bring an end to a series of missteps at Natixis in recent years which culminated in Nicolas Namias taking over as chief executive officer in August after ex-CEO Francois Riahi was ousted in a dispute over strategy. The bank had suffered trading losses on Korean securities, a liquidity scare at its H2O asset management subsidiary and oversight problems.

Namias worked closely with BPCE chairman and CEO Laurent Mignon after his time at BPCE, which also encompasses the Banque Populaire and Caisse d’Epargne networks in France. Since taking over, he’s pressed ahead with plans to exit more complicated derivatives products, announced 350 million euros ($423 million) of cost savings by 2024 and decided to relocate jobs from Paris to Portugal. At the same time, he’s also pledged to devise a new strategic plan by the summer in a bid to turn around the bank.

“Over recent months we have implemented several strategic and operational decisions, which have put Natixis back on track with its value creation ambition,” Namias said in the statement. “The current and foreseeable trends on the financial and regulatory fronts have led us to reconsider the Groupe BPCE and Natixis’s organisational structure, for the benefit of all stakeholders.”

BPCE said it wanted to create a new global financial services arm housing its corporate and investment banking and asset and wealth management divisions. It will also look to bring its insurance and payment businesses under the same roof as its retail operations. Mignon said the bank wouldn’t rule out relisting its Natixis Investment Managers business in the future.

The bank intends to operate a mandatory squeeze-out procedure if minority shareholders hold less than 10% of the company’s capital and voting rights after the tender offer.

“Taking Natixis private would allow BPCE to restructure its investment banking business, and invest in it without having to monitor the unit’s quarterly profitability, which can be volatile, Jon Peace, head of European banks research at Credit Suisse, said before the announcement. “However, it would be challenging to generate synergies with the group’s retail operations.”

(Adds shares in second paragraph.)

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