AllianceBernstein and Societe Generale Form JV Called Bernstein Research

Posted on 11/23/2022

AllianceBernstein (NYSE: AB) and Societe Generale (EURONEXT: GLE) disclosed plans to form a joint venture combining their cash equities and equity research businesses.

For both Bernstein Research’s and Societe Generale’s clients, including institutional investors and corporate and financial institution issuers, this new joint venture would offer global services across cash equities and research, combined with Societe Generale’s integrated equity capital markets, equity derivatives and prime services platforms. The joint venture would provide investment insights into the American, European, and Asia Pacific equity markets, in addition to liquidity access and global trading technology.

Bernstein Research and Societe Generale are committed to fostering a strong cultural identity for the joint venture.

Societe Generale intends to take a 51% interest in the joint venture, with an option to reach 100% ownership after five years. The business would be run as a long-term partnership under the Bernstein name, headquartered in London. Upon closing, Robert van Brugge, CEO of Bernstein Research, would become CEO of the new entity for an initial term of five years, and Stephane Loiseau, Head of Societe Generale’s cash equities business, would become Deputy CEO.

The proposed transaction has received the support of Societe Generale’s and AllianceBernstein’s Boards of Directors. The closing is expected to occur before the end of 2023. The transaction is subject to workers council consultation, approval of regulators, and customary closing conditions. AllianceBernstein and Societe Generale will work closely together to ensure a smooth transition for their staff, clients, and partners.

An equalization payment from Societe Generale to AllianceBernstein would occur at the close of the transaction.

As AllianceBernstein will own less than 50% of the joint venture, AllianceBernstein anticipates deconsolidating Bernstein Research from its financial statements following the close of the transaction. The deconsolidation is expected to have a modestly positive impact on AllianceBernstein’s operating margin. The planned joint venture is not expected to have an impact on AllianceBernstein’s asset management business or Bernstein Private Wealth Management’s business.

Ardea Partners served as financial advisor and Latham & Watkins LLP served as legal counsel to AB.

The joint venture would be 100% consolidated by Societe Generale from an accounting and regulatory perspective. A call option would be granted to Societe Generale to purchase the 49% owned by AllianceBernstein and reciprocally, a put option would be granted to AllianceBernstein to sell its 49% to Societe Generale as of the 5th anniversary of the closing date, and for a one-month period each successive year thereafter.

AllianceBernstein traces its origins back to the founding of Sanford C. Bernstein in 1967 as an investment-management firm for private clients. Sanford C. Bernstein & Company was originally co-founded by Zalman Bernstein, Paul P. Bernstein, Shepard D. Osherow, Roger Hertog and Lewis A. Sanders. Alliance Capital was founded in 1971 when the investment-management department of Donaldson, Lufkin & Jenrette, Inc. merged with the investment-advisory business of Moody’s Investor Services, Inc.

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