Australia Regulator Blocks NAB’s $12 Billion AXA Asia Pacific Bid

By | September 9, 2010

Australia’s competition regulator has again blocked National Australia Bank’s $12 billion bid for AXA Asia Pacific, dealing a blow to NAB’s 9-month efforts to cement its dominance in the world’s fourth-largest wealth management market.

The ruling sent AXA Asia Pacific’s shares tumbling by a tenth to levels not seen since it was put in play late last year.

The decision clears the deck for Australia’s No.2 fund manager AMP to come back into the deal after its offer was trumped by NAB in December last year.

While analysts have said NAB could still hang on in the deal if AXA Asia’s parent France’s AXA gives it more time to convince the regulator by offering to sell more assets, investors said it could be time for NAB to walk away.

“I think it is time for NAB to move away from this bid. It has been nearly a year and they don’t need more distractions,” said Tom Elliot, Managing Director at hedge fund MM&E Capital.

“Now AMP may decide not to come back and that would leave AXA Asia hanging,” he added.

NAB shares rose as much 2.4 percent on relief it would not have to raise more equity and can focus on its core operations.

The ruling is also a blow to French insurer AXA SA, which is itching to shed its Australian operations and buy back its Asian businesses from the winner to concentrate on the fast-growing region. AXA SA said it was reviewing its options on how to expand in Asia.

The Australian Competition and Consumer Commission, which last month agreed to consult the market on NAB’s plan to sell AXA’s key assets to gain approval, said participants had argued that NAB’s plan did not effectively address competition concerns.

“The proposed undertakings offered by the parties do not provide sufficient certainty that the ACCC’s competition concerns will be addressed,” ACCC deputy chairman Peter Kell said in a statement.

“The ACCC … remains opposed because it would be likely to result in a substantial lessening of competition in the relevant retail investment platform market.”


NAB and AXA Asia said they were considering the implications of the ruling. AMP welcomed the ruling and said while AXA was a strategic target it was too early to decide its next step.

The regulator had blocked the deal in April in favor of AMP’s offer, citing concerns over competition in retail investment platforms — a portal that binds the wealth manager, financial products and customers.

Australia’s top four banks, which hold dominant positions in everything from mortgages to life insurance, are looking to increase their sway over the $1 trillion wealth market that is seen growing at over 10 percent annually for the next five years on compulsory pension contributions, compared to loan growth of under 5 percent a year.

The challenge for NAB CEO Cameron Clyne now is to explain to investors why he pursued a deal that looked a tough sell to regulators instead of strengthening its own wealth management unit that is losing market share.

NAB, already the country’s biggest lender and top wealth manager had offered to sell AXA Asia Pacific’s North Platform, which administers A$1.36 billion [US$1.258 billion], to smaller wealth manager IOOF Ltd.

Under NAB’s offer, AXA Asia Pacific shareholders can either opt to take A$6.43 [US$5.95] in cash for each share they own or 0.1745 NAB shares and A$1.59 [US$1.47] in cash.

Under AMP’s lapsed offer, AXA shareholders would have got 0.6896 AMP shares plus A$1.92 [US$1.775] a share. However, AMP has said it hopes to come back with an acceptable offer for AXA Asia.

JPMorgan and Nomura are advising NAB, while Macquarie is advising AXA Asia Pacific. Deutsche Bank is on France’s AXA’s side, while AMP is backed by UBS and Greenhill Caliburn.

(Additional reporting by Sonali Paul and Miranda Maxwell in MELBOURNE; Editing by Ed Davies)

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