According to the Bloomberg news agency, French major bank BNP Paribas is in negotiations to become a major shareholder in the insurance holding company Ageas. We are mainly known for its subsidiary AG, the largest Belgian insurance group.
BNP Paribas is looking to acquire the Chinese Fosun’s stake in Ageas. Fosun is in financial trouble and is looking for a buyer for this package. Last month it sold one quarter of its Ageas shares. Fosun now still has 7.1 percent of Ageas and is the largest shareholder after the Blackrock fund group.
If BNP Paribas succeeds in purchasing Fosun’s Ageas shares, the Belgian insurer will become even more French. According to Bloomberg, it is not yet certain whether the transaction envisaged by BNP Paribas will go ahead. This is not the first time that BNP Paribas has eyed Ageas. The insurance holding company has achieved a strong track record over the past ten years.
Credit crisis
BNP Paribas is no stranger to Ageas. The French major bank already owns a quarter of insurer AG, the main subsidiary of Ageas. It acquired that interest during the credit crisis in 2009. Parent company Fortis threatened to collapse due to unsellable investment products and an overconfident takeover of the Dutch ABN Amro.
The Belgian state had to temporarily nationalize Fortis Bank and sold it to BNP Paribas at an absolute bottom price. The French also wanted to acquire the insurer AG, the other crown jewel of the group. But after protests from shareholders, they had to settle for 25 percent instead of 100 percent.
French change
For BNP Paribas, the entry ticket into Ageas would only cost just over half a billion at current rates. That’s change for the French. The amount corresponds to one sixth of the annual dividend that Paris receives from the Belgian bank BNP Paribas Fortis.
Paris now receives 3 billion euros in dividends annually from its Belgian subsidiary. That is a significant difference with the 2.5 billion euros that the Belgian state has received from Belfius since 2011.
The Belgian government is still the largest shareholder of BNP Paribas, despite the fact that its stake was reduced to 8 percent. Belgium has never sought control over the French bank. The Belgian interest is the result of the fact that BNP Paribas paid for the acquisition of BNP Paribas Fortis with shares at the time. While the value of the Belgian bank subsequently recovered spectacularly, the share price of BNP Paribas is still lower than in 2008.
Ageas on a takeover path
If BNP Paribas succeeds in the takeover of the Fosun shares, the question will be how the French will position themselves at Ageas. It is unclear whether they will join the board of directors and weigh in on strategic choices. Ageas is today at an important crossroads. It has made an offer of the equivalent of 3.7 billion euros for the British car insurer Direct Line. The British reject Ageas’s advances. By March 27, Ageas must reveal its colours: will it continue with its offer or withdraw for the time being?
Ageas says the acquisition of Direct Line is necessary to broaden its revenue stream. It wants to be able to distribute Direct Line’s profits to its own shareholders. Current dividend payments are in danger of coming under pressure because Ageas cannot generate sufficient profits from Asia. The Asian insurers in which Ageas participates need their own profits to continue to grow.
Ageas wants to finance the offer for Direct Line largely in shares. This would dilute the interest of Fosun (or BNP Paribas). The Belgian government holding company Fpim would also see its stake diluted. It owns 6.4 percent of Ageas after it bought in at a high price two years ago by purchasing a package from a Chinese shareholder.
2024-03-15 10:41:30
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