NAB Sticks It To AMP

Post by Sharat on December 17, 2009 · Under Business News, Capital Markets, Company News, Mergers & Acquistions, Wealth Management, banking · Comment

In what can only be described as a stunning turn of events, Australian banking major upped the ante, offering a surprise higher bid for insurer AXA Asia Pacific Holdings (APH), trumping a rival bid which has been in the works for the last month launched by French insurance giant AXA SA and Australian wealth manager AMP.

NAB says it has already reached an agreement with APH’s independent directors to acquire the company’s Australian and New Zealand assets and would effectively replace AMP in the original joint acquisition bid with AXA SA, acquiring the entire company for $13.29 billion and simultaneously selling off the Asian assets to AXA SA for approximately $7 billion.

The deal relies on the joint bidder AXA SA maintaining its financial support and financial contribution towards the bid under the exact same terms outlined under the initial deal.

“The independent board committee has unanimously concluded that the NAB proposal is in the best interests of AXA APH minority shareholders and superior to the rejected AMP/AXA SA revised proposal, in both its value and terms. We believe the NAB proposal recognises the strength of this franchise and its growth prospects.” AXA APH chairman Rick Allert said in a statement on Thursday.

The acquisition of APH’s Australian and New Zealand assets would transform NAB into the largest fund manager/superannuation and retirement income provider, cementing its position as Australia’s leading life insurer.

“We see this as a transformational and strategic deal, It is consistent with our continued focus on the Australian market and our growing leadership positions in business banking and wealth management.” NAB chief executive Cameron Clyne.

The surprise revelation comes just a few days after AMP and AXA SA sweetened their original bid by increasing its cash component increasing APH’s valuation to $12.8 billion and issuing a December 21st deadline.

NAB’s current bid values APH at $13.29 billion.

An AMP spokeswoman said the company had no comment yet on the NAB deal.

According to APH chairman Rick Allert, NAB first approached APH about making a rival bid a “few weeks ago”. Independent board members then approved NAB’s request to conduct some limited due diligence, and a formal bid was tabled on Wednesday.

NAB is planning a $1.5 billion renounce-able rights issue early in 2010 to raise funds to help pay for the transaction.

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