National Australia Bank made a surprise trump bid for AXA Asia Pacific Holdings’ Australian and New Zealand units on Thursday, in a cash deal that would value all the target firm at around $12 billion.
The bid tops an offer from Australian life insurer AMP Ltd, which had faced resistance from AXA Asia Pacific’s independent directors who were looking for a higher offer.
AXA Asia Pacific backed NAB’s bid, which was worth 1-2 percent more than AMP’s offer, sweetened on Monday and made in conjunction with AXA Asia Pacific’s parent, French firm AXA SA.
Like AMP’s proposal, NAB would keep AXA Asia Pacific’s Australia and New Zealand operations and sell the Asian operations to AXA SA, as Australia’s biggest lender looks to consolidate its position as the country’s top wealth manager.
NAB’s proposal puts all the onus on AMP to step up its offer, as NAB’s plan would leave AXA SA paying the same amount as it would have under the joint proposal with AMP. “The game’s not over yet,” said Peter Vann, an analyst at Constellation Capital Management, which owns shares in AXA Asia Pacific.
NAB said its proposal, conditional on support from AXA SA, would involve NAB first making an offer for all of AXA Asia Pacific, worth $11.98 billion in cash, and then selling the firm’s Asian assets to AXA.
The proposal will deliver AXA Asia-Pacific shareholders either A$6.43 [US $5.71] cash per share or an alternative offer of A$1.59 [US$1.41] cash and 0.1745 of a NAB share.
NAB’s offer values the Australia and New Zealand operations at A$4.6 billion (US $4.08 billion), compared with AMP’s valuation at around A$3.9 billion [US $3.46 billion].
Fund managers said they were surprised by the move by NAB, which also owns banks in the UK. “We would have been more expecting an acquisition of something in the UK, where prices are probably a bit more interesting than they are here in Australia,” said Matt Williams, Australian equities manager at Perpetual Investments, which holds NAB shares, but no shares in AMP and AXA.
AMP and AXA SA, which have an exclusivity arrangement up to Feb. 6, both said they were considering their positions. Fund managers said it was not clear how NAB’s offer would get around the exclusivity arrangement.
That uncertainty kept AXA’s shares below the value of NAB’s offer, although they jumped 11 percent to A$6.28 [US $5.58].
AMP shares rose 4.9 percent to A$6.40 [US $5.69], reflecting hedge funds getting out of short positions. Analysts said it could also reflect bets that AMP could become a target for another Australian bank.
“It leaves AMP and ANZ (Australia and New Zealand Banking Group) as the potential obvious tie-up down the track,” said Perpetual’s Williams.
NAB has been expanding in wealth management, looking to build scale as Australia reviews rules on pension funds to improve returns to investors. It bought British insurer Aviva’s Australian operations earlier this year.
“We believe the wealth management side of the business is one that has real growth potential, particularly for example if we see superannuation contribution rates going from 9 to 12 percent and potentially higher,” NAB Chairman Michael Chaney told analysts and reporters. “We think that’s an area in which we have strength and it’s sensible to add to it.”
(Additional reporting by Sonali Paul and Eriko Amaha) (Editing by Ian Geoghegan)
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