Allianz to Acquire Nicholas-Applegate

Allianz, Europe’s No. 2 insurer, agreed to acquire San Diego-based stock mutual fund manager Nicholas-Applegate Capital Management for as much as $2.2 billion.

The deal, rumored for months, gives Allianz another Southern California fund entity. Five months ago it bought Newport Beach-based bond-fund giant Pimco Advisors Holdings.

The German company agreed to pay $980 million for Nicholas-Applegate and may spend $1.09 billion more depending on the firm’s performance.

Allianz also will pay $150 million to keep people at Nicholas-Applegate, which has $45 billion under management.

The 16-year-old firm, more than 75%-owned by co-founder Arthur Nicholas, will help plug a hole in Allianz’s conservative investment lineup, analysts said. Nicholas-Applegate is mostly known as a growth-stock manager.

“Allianz has to do more to build up its operations for managing other people’s money, both in Europe and the U.S.,” said Karsten Tripp, the head of research at HSBC Trinkaus Capital Management in Dusseldorf, Germany, which owns Allianz shares.

The Munich-based insurer was overtaken by Axa of France in the 1990s as Europe’s biggest insurer in terms of premiums, and is still catching up with the likes of Zurich Financial Services in asset management for individuals and institutions.

European financial firms have been on a buying spree this year, snapping up U.S. mutual fund managers and brokerages, including PaineWebber, Donaldson Lufkin & Jenrette, National Discount Brokers, United Asset Management and Pioneer Group.

Arthur Nicholas will continue to run Nicholas-Applegate after the purchase, Allianz said. The firm, which employs 400 people in offices in San Diego, New York, San Francisco, Chicago, Amsterdam and Melbourne, offers 35 investment funds.