Is the French parent of AXA Asia Pacific readying itself to raise the billions necessary to buy the Asian operations of its local arm, as part of a deal with the National Australia Bank or the AMP?
UK reports have confirmed that AXA SA is looking to sell its UK pensions and life insurance business for a reported 2.75 billion pounds (more than $A4.5 billion), which would finance around half the cost of its ambitious Asian move.
The buyer is an aggressive UK group, Resolution, which is seeking to rationalise the UK insurance sector.
The London reports say if successful, its bid would see it create a new enlarged life, protection, annuities and group pensions business by merging the UK operations of AXA with those of Friends Provident which it acquired last year for 1.9 billion pounds.
Resolution confirmed the talks in a short statement on Friday night, our time.
"Resolution confirms it is in discussions.
"If implemented, this transaction would result in the acquisition of the majority of AXA’s life assurance operations in the UK, including its businesses in the risk areas of protection and annuities and also its group pensions business. Resolution intends to consolidate the AXA businesses with its Friends Provident operations.
"The combination would create one of the UK’s largest providers of protection products and group pensions services. There is no certainty these discussions will result in a transaction."
AXA has 10 million customers and 11,000 employees in Britain. Sales of its life and pensions products fell 22% last year to 2.8 billion euros.
The business Resolution is interested in lost 33 million euros in 2009, compared with a 257 million-euro profit a year earlier.
That reflects the losses in the first half and then a second half bounce. AXA AP had a similar result for 2009.
AXA SA owns 54% of AXA AP, but that hasn’t helped.
It tried to buy its Australian subsidiary in 2009 to kick-start its Asian move, but failed when it didn’t offer enough to convince the local company’s independent directors.
London reports also say there could be an update in the next day from both groups on the talks, with completion set by the end of this month.
The cash raised from a sale of the life business would enable AXA to fund its stuttering Asian strategy.
It is waiting on the sidelines to buy the Asian businesses of AXA AP for around $A9.2 billion, based on the value of the NAB bid of around $A13.3 billion.
These include operations in eight Asian countries including China, Singapore, Indonesia, and Malaysia.
But the NAB hasn’t got approval from the Australian competition regulator to take over AXA AP and it’s looking increasingly unlikely that it will get the greenlight without making more significant concessions.
But the AMP is clear to go, so subject to it lifting its offer to match or beat the NAB’s price, the deal should happen either way.
Hence the French parent readying its war chest.
