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AllianceBernstein and Societe Generale Plan to Form a JV

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AllianceBernstein Holding L.P. (AB - Free Report) and Societe Generale (SCGLY - Free Report) have decided to form a joint venture (JV) by combining their cash equities and equity research businesses. The closing of the deal, expected before the end of 2023, is subject to workers’ council consultation, approval of regulators and customary closing conditions.

Societe Generale intends for a 51% stake in the JV, with an option to reach 100% ownership after five years. The JV would be run as a long-term partnership under the Bernstein name, headquartered in London.

Once the deal is closed, Robert van Brugge, the CEO of Bernstein Research, will become the CEO of the new entity for an initial period of five years. Stephane Loiseau, the head of Societe Generale’s cash equities business, will be the deputy CEO.

The JV is expected to provide premier investment insights into the American, European and Asia Pacific equity markets in addition to unparalleled liquidity access and leading global trading technology. The merged entity will bring complementary strengths and a shared vision of a leading full-service equity brokerage business to support the needs of global investor and issuer clients.

For AB and Societe Generale’s clients, the JV will offer a comprehensive global suite of world-class services across cash equities and research, combined with SCGLY’s integrated equity capital markets, equity derivatives and prime services platforms.

Seth Bernstein, the president and CEO of AllianceBernstein, stated, “In Societe Generale, we have a strategic partner who is committed to strengthening and growing our world-class cash equities and research business.”

Slawomir Krupa, the head of Global Banking and Investor Solutions at Societe Generale, said, ”This partnership with one of the most recognized firms in research and cash equities, combined with our global leadership in equity derivatives, would create an indisputable leader across the equity business for the benefit of our issuer and investor clients.”

Since AllianceBernstein will own less than 50% of the JV, it anticipates deconsolidating Bernstein Research from its financial statements following the completion of the transaction. The deconsolidation is expected to have a modest positive impact on AB’s operating margin.

However, the transaction is not expected to have an impact on AllianceBernstein’s asset management business or Bernstein Private Wealth Management’s business.

Over the past year, shares of AB have lost 26.3% and the SCGLY stock has declined 24.8%.
 

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Currently, AllianceBernstein carries a Zacks Rank #4 (Sell), while SCGLY carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Of late, finance stocks, especially banks, have been thriving to expand through acquisitions amid a challenging operating environment. Washington Federal, Inc. (WAFD - Free Report) announced its plan to enter the lucrative and “fast-growing” California market. The company signed an agreement to acquire Luther Burbank Corporation (LBC - Free Report) and its wholly-owned subsidiary, Luther Burbank Savings, for $654 million.

Washington Federal is expected to use the deal as “a platform for growth in attractive California markets.” The company intends to enhance multi-family loan origination capabilities and expand commercial banking activities to Northern and Southern California. At present, LBC operates in California, Washington and Oregon through 11 full-service branches and seven loan production offices.

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