Tags: AXA | Asia | Bid | Parent | amp

AXA Asia Gets $13.1 Billion Bid From Parent, AMP

Monday, 15 Nov 2010 04:24 AM

 

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Australian wealth manager AMP and French insurer AXA launched a $13.1 billion-plus bid for AXA Asia Pacific to close one of Asia's largest takeovers that has dragged on for a year.

A deal would put AMP on top of Australia's $1.2 trillion wealth management market, allowing it to compete with the four banks that dominate the market.

It would also allow French parent AXA SA to exit Australia and allow it to focus on its stated goal of growing in Asia.

In a complex deal, AMP will pay A$4.15 billion for AXA Asia Pacific's Australia and New Zealand business, while AXA SA will pay A$10.4 billion for the Asian assets, including taking over the A$1.3 billion in debt.

"This should eventually close the deal. The AXA Asia board has no other bidders and the deal meets the price they want. The only issue is it is heavily scrip based," said Tom Elliot, Managing Director at Melbourne-based hedge fund MM&E Capital.

The current bid from AMP/AXA SA, which is A$539 million higher than their previous offer in December, will be on par with the National Australia Bank bid rejected by Australia's competition regulator in September.

Shares Rise

AMP and AXA SA have offered at least A$6.43 per share for each share, representing a 10.3 percent premium to AXA Asia's Friday's closing.

The offer will be made of 0.73 AMP share plus a variable cash amount based on AMP's share price performance.

Shares in AXA Asia Pacific jumped 7.6 percent to A$6.22, while AMP shares rose 4.1 percent to A$5.55.

The deal values AXA Asia at about 16 times forward earnings, on par with the price NAB paid for Aviva's Australian wealth business last year but more expensive than Australia and New Zealand Banking Group's buyout of a wealth joint venture with ING at 13.3 times forward earnings.

AXA Asia Pacific said its independent directors were considering the offer. "AMP and AXA APH are natural partners to build a company that would have the scale and distribution to provide greater competition to the big banks in the wealth management market," AMP chief executive Craig Dunn said in a statement.

A combined AMP-AXA will top all segments of the Australian wealth management sector from private pension management to retail management funds with a market share ranging from 19 to 24 percent in each sector.

The mature business profile and the challenge of taking on the banks also kept at bay any foreign interest leaving AMP as the sole interested party.

AMP, which said the deal would be earnings neutral until 2012 and accretive thereafter, will not raise any equity for the deal but launch an A$600 million subordinated debt offering.

AMP is advised by UBS and Greenhill Caliburn, AXA SA by Deutsche Bank and AXA Asia Pacific by Macquarie.

© 2014 Thomson/Reuters. All rights reserved.

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