Morgan Stanley analyst Michael Cyprys said he would expect Victory Capital shares to be softer following a topline miss that drove its earnings to fall short of expectations, but he thinks the double digit share price decline in early trading seemed "extreme" and appeared overdone. Victory also initiated a quarterly dividend of 5c per share, which was ahead of his expectations for one to start in 2020, added Cyprys. He maintains an Equal Weight rating and $18 price target on Victory Capital shares, which are well off their early lows to be down 76c, or 4.4%, at $16.53 in afternoon trading.

Amundi and Victory Capital announced that they have signed a memorandum of understanding to combine Amundi U.S. into Victory Capital, for Amundi to become a strategic shareholder of Victory Capital, and to establish long-term global distribution agreements. The proposed transaction would create a broader U.S. investment platform for clients of both firms, provide Amundi with access to a wider set of U.S.-managed capabilities, and expand worldwide distribution for Victory Capital. Amundi U.S. currently manages $104B of assets across a broad array of asset classes, including U.S. and global equity, fixed income and multi-asset investment capabilities for individuals and institutions worldwide. Under the proposed transaction: Amundi U.S. would be combined into Victory Capital in exchange for a 26.1% economic stake for Amundi in Victory Capital, with no cash payment involved. Amundi would become a strategic shareholder of Victory Capital with two of its representatives joining the Victory Capital board of directors when the transaction closes. Both parties would simultaneously enter into 15-year reciprocal distribution agreements. Under these proposed distribution agreements: Amundi would be the distributor of Victory Capital's investment offering outside of the U.S. This would allow Victory Capital to further expand its reach beyond the U.S. through Amundi's global client base, which would benefit from Victory Capital's investment expertise and investment performance track record across a wider range of U.S. manufactured solutions. Victory Capital would become the distributor of Amundi's non-U.S. manufactured products in the U.S. As a result, Amundi would gain access to an expanded distribution platform in the U.S., while providing Victory Capital's clients with its wide range of high-performing non-U.S. investment capabilities. As contemplated, the transaction is expected to be accretive for the shareholders of both Victory Capital and Amundi, increasing adjusted net income and earnings per share for both companies. The parties are working toward definitive agreement, which is expected to be announced by the end of the second quarter. The memorandum of understanding is non-binding on the parties. As with any negotiation, there is no certainty that these negotiations will result in a definitive agreement. The ultimate completion of a transaction would remain subject to conditions, including regulatory approvals.