UniCredito Italiano Group of Milan is planting its stake in the United States with a $1.2 billion deal for Pioneer Group Inc. but faces an uphill battle to gain market share here.
The $150 billion-asset banking company, which says it is Italy's second largest, said Monday it would purchase all the outstanding shares of Pioneer for $43.50 cash per share - $1.50 above what a shareholder activist firm said the embattled Boston mutual fund company could fetch.
UniCredito is "buying into a product that needs a fair amount of retooling," said Geoffrey Bobroff, a mutual fund consultant in East Greenwich, R.I.
In March, Pioneer dropped from the top 50 mutual fund companies in the United States, according to Financial Research Corp. of Boston.
The announcement came as other European financial services companies are spreading their wings here. Allianz AG's deal for Pimco Advisors Holdings LP and Amsterdam-based ING Group NV's for ReliaStar Financial Corp. of Minneapolis are two recent examples.
But Mr. Bobroff said many of those cross-border deals had scant success in building the asset base.
The UniCredito deal is for Pioneer's $24 billion global investment management business, which has money management operations in the United States, Czech Republic, Poland, Germany, India, Ireland, and Russia.
Pioneer's investment management business would be folded into UniCredito's. The combined, which would be named Pioneer Global Asset Management, would have about $104 billion of assets under management. UniCredito manages 90 mutual funds and has asset management offices in Dublin and Milan.
Pioneer has also agreed to distribute to shareholders 100% of the company's ownership interest in its remaining assets, including its Russian timber operation, before the the deal's close, which is expected in the third quarter.
Pioneer has been shopping for a buyer since March, when it hired Merrill Lynch & Co. and Salomon Smith Barney Inc. to explore "strategic alternatives." The deal will also effectively end its proxy fight with Lens Investment Management LLC, which owns about 4.3% of Pioneer's stock.
Lens was seeking to unseat Pioneer's board with its own candidates to negotiate a sale of the company for as much as $42 per share.
Lens said Monday that it is pleased with the deale and would vote its shares for Pioneer's management slate at the shareholders meeting on Tuesday but would continue to monitor the company.
Pietro Modiano, head of treasury, investment banking, and asset management at UniCredito, will be chairman of the combined money management business. The company's U.S. headquarters will remain in Boston, and John F. Cogan Jr., president and chief executive of Pioneer, will be deputy chairman.