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Allianz eyeing Pimco
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October 6, 1999: 9:59 a.m. ET
German insurer in 'advanced' talks with U.S. fund manager over $4.7B offer
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LONDON (CNNfn) - Allianz, Europe's second-biggest insurer, confirmed Wednesday it's in advanced talks that could lead to a $4.7 billion offer for U.S. fund manager Pimco Advisors.
"The current discussions contemplate a cash transaction with a per [share] price ranging from US$38 to US$39," the German insurance company said in a statement.
"We are in advanced talks but nothing has been signed yet," an Allianz spokesman told CNNfn.com. "There are substantial terms on which no agreement has been reached," he added. The company also stressed that the price range was still not fixed.
The latest move comes three months after Allianz first said it was holding talks with California-based Pimco (PA).
The two parties were forced to issue the latest statement after the news leaked out Tuesday, but Allianz was keen to stress that there are plenty of stumbling blocks.
Analysts believe the deal is almost certain to go through, and said the slow progress was probably due to the complicated ownership structure and tax status of Pimco Advisors.
"Technical issues such as the ownership structure and tax status will have to be addressed," William Hawkins, insurance analyst at financial brokerage Fox-Pitt, Kelton in London told CNNfn.com. "But you don't make such a statement unless negotiations are well advanced."
There are some concerns that Allianz might overpay for Pimco, but analysts thought this was unlikely to put the insurance giant off. "In current market conditions, a high quality U.S. asset manager doesn't come cheap," Hawkins said.
A successful deal would give Allianz entry into the lucrative U.S. investment market, a key part of the insurer's future strategy. Pimco manages $250 billion in assets.
The Munich-based company is following a trail blazed into the United States by Europe's No.1 insurer Axa. The French giant took control of Allied Capital Management via its take-over of The Equitable Companies in 1991.
Zurich Allied, Europe's third largest insurance company, bought Scudder Kemper two years ago.
Other European financial institutions are eyeing the U.S. investment market, with Dutch powerhouse ING Groep at the top of the list, according to analysts.
Allianz shares rose 1.3% to 282.40 euros in Wednesday afternoon trading in Frankfurt. Pimco shares closed at 32-3/4 in New York Tuesday.
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