Australia’s competition watchdog raised concerns on Wednesday over National Australia Bank’s (NAB) $11.6 billion bid for fund manager AXA Asia Pacific, tipping the scales toward rival bidder AMP.
NAB, already the country’s largest manager of retail funds, is bidding against wealth manager AMP, the number three, in a lengthy takeover battle for AXA Asia Pacific, which is controlled by French insurer AXA SA.
AMP shares rallied towards the market’s close as the news was released and ended 1.92 percent higher at A$6.37 [US$5.587].
NAB shares extended their losses, finishing down 2.3 percent while AXA Asia Pacific shares closed unchanged. The broader market ended 8.2 percent higher.
NAB’s offer currently trumps AMP, whose bid values AXA Asia Pacific at $11.4 billion, but the competition watchdog could yet block the bank’s ambition to dominate wealth management, seen among the fastest-growing areas of financial services.
“It appears to the ACCC (Australian Competition and Consumer Commission) that NAB’s proposed acquisition of AXA raises a higher level of concern than AMP’s proposed acquisition of AXA,” the regulator said in a statement.
The ACCC said it hoped to decide on the two bids by March 17. The regulator said it was considering whether AMP could remain an effective competitor if it failed in its bid for AXA Asia Pacific or whether it would become a takeover target.
The ACCC also said it was examining whether a combined AMP-AXA would become a fifth pillar against the four big banks.
A combined AMP and AXA would become the top player in the retail managed funds market with a 16.8 percent market share based on end-September data from actuary Plan for Life.
On the other hand, an NAB/AXA grouping would rule over a fifth of the market and have a seven percentage point lead over its closest rival, raising concerns of diminished competition.
An AMP spokeswoman said the company was reviewing the ACCC statement. An NAB spokesman could not be immediately reached for comment.
AMP and France’s AXA teamed last year to jointly bid for AXA Asia Pacific, with AXA to walk away with the Australian-listed subsidiary’s Asian assets and AMP to keep the local assets.
NAB later made a counter bid, structuring it along similar lines, so that AXA too would end up with the Asian businesses.
AMP and AXA SA’s exclusivity agreement to bid for AXA Asia Pacific expired on Saturday, and AMP has said it is considering its position.
A media report said a team from NAB, the country’s top lender, had gone to Paris to start talks with AXA SA.
AXA Asia Pacific’s directors rejected AMP’s offer and backed NAB’s higher offer in December, but AMP is counting on competition concerns complicating NAB’s bid, which would leave the door open for it to come back with another offer.
AMP and NAB went after AXA’s Australia business late last year, eyeing a larger share of Australia’s $900 billion wealth management industry, which promises to grow faster as the population ages and as the government considers raising compulsory retirement savings.
Winning AXA AP would put NAB on track to be the country’s top player in banking, insurance and wealth. AMP needs to acquire a business like AXA to act as a poison pill against a takeover attempt by the big banks.
(Editing by Mark Bendeich and Valerie Lee)
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