The long running takeover battle for AXA Asia Pacific Holdings will run for another month at least after the ACCC said it would consult the market on the latest attempt by the National Australia Bank to get the bid approved.
The NAB and AXA announced yesterday that the bank proposes to sell the so-called North wealth management platform to IOOF, in order to gain approval of its offer to buy AXA AP.
The ACCC said in a statement that it was seeking views whether NAB’s sale of AXA APH’s North platform to IOOF would alleviate its competition concerns.
The news saw AXA shares relisted and trading resume, and the shares rose around 7% to a day’s high of $5.60 (still down on what they were last Wednesday before they dropped 9% last Thursday).
They closed up 5.4% at $5.49, a rise of 28c on the day.
NAB shares were sold off: they fell to a day’s low of $24.82, but scrambled back in afternoon trading to end up fractionally at $25.05, as investors took a positive view that the ACCC decision could see the lengthy deal end in favour of the bank next month.
But overall investors are unhappy that the NAB is going to spend more than $13 billion up front on the deal (and get a lot back from AXA’s French parent).
The Commission promises a decision by September 9, after the August 21 poll. It listed 13 issues it has with the proposal, all of which are to be found on the Commission website.
The Commission said:
"The Australian Competition and Consumer Commission today commenced market consultation on proposed undertakings offered by National Australia Bank Limited (NAB) and AXA Asia Pacific Holdings Limited (AXA).
The undertakings seek to address the ACCC’s competition concerns that the proposed acquisition of AXA by NAB would be likely to result in a substantial lessening of competition.
On 19 April 2010, the ACCC announced its decision to oppose the proposed acquisition of AXA by NAB. The ACCC found that a merger of NAB and AXA would likely result in a substantial lessening of competition in the market for the supply of retail investment platforms for investors with complex investment needs.
The ACCC considered that AXA’s North platform has the potential to provide a strong competitive constraint in this market, in the form of platform functionality and innovation, and is likely to be versatile in responding to future competing platform offerings.
The ACCC found that NAB is a significant competitor in the provision of retail investment platforms for this investor group and that a merger of NAB and AXA would remove competitive tension.
The undertakings provide for the divestiture of the North platform administration business carried out by AXA using the Bluedoor software (owned by DST Global Solutions) to IOOF Limited (IOOF).
The ACCC now seeks views from market participants to assist its consideration of the undertakings and of IOOF as a proposed purchaser of the divestiture business, and to determine whether the proposed divestiture would be likely to alleviate the ACCC’s competition concerns.
The ACCC’s concerns and the objectives of the undertakings in resolving them are explained in the undertaking documentation, along with the details of how they are intended to operate.
Following market consultation, the ACCC will decide whether to accept or reject the proposed undertakings, including IOOF as a proposed purchaser of the divestiture business."
AXA said in its statement yesterday:
"The proposed undertakings, AXA APH’s North wealth.net investment platform would be divested to IOOF Holdings Limited (IOOF).
This platform business involves the operation of the North retail investment platform, which is an administrative structure for investments and provides a central ‘hub’ account for a range of services, including ‘menus’ of products, capturing details of a client’s portfolio and consolidated reporting.
This platform currently provides these services to the North investment products.
NAB has agreed to provide funding to IOOF to complete certain enhancements designed to continue the development of the North wealth.net investment platform. NAB would retain the North product range developed by AXA APH and enter into an exclusive platform administration services agreement with IOOF with respect to the North products for a minimum of three years from completion of the platform enhancements.
To give effect to the undertakings, AXA APH and NAB have entered into conditional sale and support agreements with IOOF and DST Global, the provider of technology underlying the North wealth.net investment platform.
The agreements are conditional on, amongst other things, the ACCC accepting the proposed undertakings and the obtaining of shareholder and court approval for the completion of the Proposal. If all conditions of the divestment are satisfied, the divestment would occur prior to NAB acquiring control of AXA APH.
If the Proposal does not proceed, there will be no divestment of the North wealth.net investment platform."
