National Australia Bank has gazumped the AMP and looks like it has snatched AXA Asia Pacific’s Australian and New Zealand units for an extra $200 million on top of what the AMP put on the table this week in its final offer.
NAB revealed its dramatic lunge for control before trading started yesterday with notification of a teleconference and then announcements.
It is the second big deal this year where the NAB has emerged with the assets of a foreign controlled financial group.
Mid year it bought the Australian insurance and funds management businesses of Aviva for $825 million.
The move took the AMP by surprise.
It issued a statement several hours after the NAB’s announcement saying it was considering its position and had an "exclusivity" agreement with AXA’s French parent until February 16.
The implication meaning that until that expires, the NAB can’t talk to the French company.
If successful, the bid will add AXA to the MLC and Aviva businesses and make the bank the second biggest funds manager in the country, overtaking the Commonwealth Bank.
The NAB will have $A144 billion of funds under management, the Commonwealth, around $190 billion.
Now it’s paying more than five times that for the local businesses of AXA (which is based on the old National Mutual from Melbourne).
"NAB today announced that it has agreed certain key terms with AXA Asia Pacific (“AXA AP”) for NAB to acquire AXA AP’s Australian and New Zealand businesses.
"AXA AP’s independent directors will recommend to shareholders that they accept NAB’s proposal (the “Proposal”) to acquire all of the shares in AXA AP on terms that value the Australian and New Zealand businesses at A$4.6 billion.
"The Proposal is subject to a number of conditions and regulatory and other approvals, including completion of due diligence, discussions with AXA SA and agreement by AXA SA to acquire the Asian businesses of AXA AP ("the AXA SA Acquisition") and execution by NAB, AXA AP and AXA SA of formal documentation to implement the Proposal and the AXA SA Acquisition."
"The NAB said the offer was "A$6.43 per share in cash; or A$1.59 in cash and 0.1745 NAB shares for each AXA AP share.
"In addition, AXA AP shareholders will receive up to 9.25 cents dividend for their AXA AP shares in relation to the second half 2009 results.
"The shares issued under the Proposal will also be entitled to receive NAB’s interim dividend payable in July 2010.
"The Proposal will provide AXA AP shareholders with the certainty of an all cash option.
"The Proposal will also offer AXA AP shareholders (other than AXA SA and its subsidiaries) the flexibility to receive part of their consideration in NAB shares and participate in the benefits of the combined business.
"The consideration is proposed to be funded from a combination of an equity raising of approximately A$1.5bn, the scrip offer and existing capital resources.
"The equity raising will be an underwritten pro-rata offer to allow all NAB shareholders to participate and will most likely be undertaken once due diligence is completed, an agreement is reached with AXA SA, and binding transaction documentation has been executed."
The statement makes it clear that to get hold of AXA’s Australian business, the NAB has to do a deal with the French parent, AXA SA.
And that also makes clear that AXA SA has to abandon the AMP, if it wants to grab control of the much desired Asian (mainly Hong Kong) business that the parent has been seeking now for the best part of five years.
Trading in NAB shares was halted for most of the day.
As part of the announcement, the NAB said it would raise $1.5 billion from shareholders.
The $4.6 billion in cash and NAB shares is around $200 million more than the $4.41 billion price in the AMP/AXA SA joint final offer made on Monday.
Axa APH on Monday said the AMP and Axa SA bid valued its Australian and New Zealand assets at about $4.41 billion, and its Asian business at about $9.63 billion.
They had been expected to give their view on the higher offer from the AMP led group (they added $1.3 billion in cash) today or tomorrow, but the NAB swooped and seems to have snatched the game.
Because the AMP and AXA SA used the word final to describe Monday’s offer, and gave a deadline of next Monday, they are powerless to stop the NAB
The NAB said the proposal would require the approval of AXA SA to go ahead, but that looks like a forgone conclusion now that it can’t bid more with the AMP.
Rather than imposing a deadline on the independent directors of AXA Asia Pacific Holdings, the AMP and the French parent of AXA have snookered themselves.
The first offer from the AMP and AXA SA was said to be worth $11 billion and it was lifted on Monday to around $12.9 billion.
French-based AXA SA owns 54% of Axa Asia Pacific.
The original plan called for the French parent to sell off Axa Asia Pacific to AMP and then buy back some of the Asian-based units.
The NAB price values the entire company at $13.3 billion.
In the market yesterday Axa Asia Pacific was a winner, with the shares up more than 12.7%, or 72 cents to $6.37.
The AMP rose more than 4.1%, or 25 cents to $6.35 as investors wondered if someone else would have a nibb
