BNP Paribas: AXA IM Acquisition Is Strategically Attractive, but It Looks Expensive

BNP Paribas has agreed to buy AXA's asset manager, AXA Investment Management, for EUR 5.1 billion in cash. We estimate this values AXA IM at 14 times the earnings it booked over the last 12 months. The multiple looks expensive compared with Amundi and Schroders, which trade at P/E ratios of 10 and 11, with better operating margins. However, strategically, the deal makes sense. Asset management remains a highly profitable and capital-light business. AXA IM's expertise in alternative assets will be complementary not only to BNP's asset management business but also to its investment bank and wealth management clients.