Competition Regulator Unlikely To Grant Approval For NAB Acquisition Of APH

Post by Sharat on June 9, 2010 · Under Business News, Company News, Mergers & Acquistions, Wealth Management, banking, investments · Comment

According to investment bank Credit Suisse, the proposed acquisition of AXA Asia Pacific Holdings (APH) by National Australia Bank is likely to not be approved by the competition regulator.

Last week, NAB disclosed that it continued to remain in discussion with the Australian Competition and Consumer Commission, and third parties who were interested in acquiring APH’s North investment platform.

NAB hopes that a sale of the investment platform would help allay the competition regulators concerns that the lender would as a result of its acquisition end up dominating the retail investment market, despite receiving no assurances from the ACCC that such a sale would put its fears to rest.

NAB is negotiating with wealth management group IOOF, Bendigo and Adelaide Bank and Perpetual to sell the platform, which is expected to be discounted to attract a buyer.

Analysts at Credit Suisse say they believe any sale and resulting lease back arrangement would make NAB the single largest customer of any potential buyer, which would mean it would have undue influence over the pricing.

“We think that the ACCC will — rightly so — come under a lot of pressure for allowing the transaction to go through under such a scenario,” analysts said.

Additionally, analysts believe that the complexity involved in stripping out the asset from the NAB operation does not make it attractive to buyers.

“Finally, we urge investors not to forget that even if NAB manages to convince the ACCC, it still needs to get Treasury approval which is nowhere near a foregone conclusion in our view,” the analysts said.

Investment bankers say that it is becoming increasingly likely that NAB would have to raise dramatically the planned $1.5 billion capital raising to finance the APH transaction.

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