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Australians Believe Not Enough Competition In Banking
A survey undertaken by Australian wealth manager AMP suggests that nearly 78 per cent of all Australians believe that acquisitions by banks should be restricted.
It is no coincidence that the survey results were released on the eve of the ruling by the competition regulator on National Australia Bank’s proposed acquisition of Axa Asia Pacific Holdings.
According to the AMP survey, an overwhelming majority of 71 per cent of people polled say they believe that there needs to be increased competition within the Australian financial services sector.
AMP is a rival bidder for AXA Asia Pacific Holdings, and is in a holding pattern until the ACCC rules on competition issues regarding NAB’s on September 9th.
AMP said it released the results of the survey this week, despite the survey being conducted in March because it felt the results were timely given the uncertainty surrounding the outcome of the federal election.
“We’re looking at how we can grow AMP Bank, and we’ve issued this now because it’s a tumultuous times in politics,” and AMP spokeswoman said.
The survey results also suggest that many Australians felt that the federal government is too soft on the big four banks. 68 per cent of those polled say they would like to see increased regulation of the industry, whilst half of those polled believe that M&A activity within banking has resulted in less choice for consumers.
Those kind of survey results should come as no surprise given that concentration of market share amongst the big four lenders has increased given the recent spate of mergers and acquisitions. Westpac acquired St George in 2008, whilst CBA acquired Bankwest.
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Foster’s In Play
The share price of Australian brewing and drinks major Fosters Group leapt as much as six per cent during trading on Monday as reports began to emerge that Beer giant SAB Miller is planning a $12.22 billion takeover attempt of Foster’s beer arm, CUB.
The report which first surfaces in the Sunday Times of London, suggests that London listed SAB Miller has Carlton United Breweries (CUB) in its sights, CUB has the Victoria Bitter and Carlton Draught brands.
If SAB Miller can reach an agreement, a deal of this kind would put it in a position to challenge the world’s largest brewer Anheuser-Busch InBev for the top spot.
According to the Sunday Times SAB chief executive Graham Mackay is apparently keen to pull off a big deal before his retirement.
SAM owns Foster’s in India and has brewing rights to the brand in America. A deal with the Melbourne-based company could provide them with a platform for expansion into Asia.
In May, Foster’s announced it would be dividing its beer and wine assets, but such a demerger is not expected to take place until next year.
The Sunday Times also suggests that SAB Miller is keen to act quickly, since the beer maker is already in play, with Japanese brewing giant Asahi considered the favourite to acquire the company.
American company Molson Coors and Coca-Cola Amatil also are thought to be interested in buying Foster’s.
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Competition Regulator Samuel Recuses Himself From AXA Deal Deliberations
The chairman of the Australian competition regulator, the ACCC, has said he will recuse himself from the decision making process of its review of the proposed $13 billion NAB-AXA Asia Pacific Holdings merger.
According to reports, NAB is a lender to Graeme Samuel, chairman of the Australian Competition and Consumer Commission investment in the troubled retail chain DFO.
As a result Mr. Samuel has indicated he will step aside from the review that is considering the proposed NAB APH merger.
NAB said both itself and AXA APH had been consulted with first, and both parties say they were unconcerned with Mr. Samuel continuing to be involved in the deliberations. However the ACCC says it has accepted Mr. Samuel’s decision to “cease to be involved in any further commission deliberations on the NAB/AXA APH merger proposal”.
Mr. Samuel has an interest in the holding company Austexx which manages the DFO discount shopping empire, and is also teetering on the edge of bankruptcy.
Mr. Samuel’s investment was made through a blind trust, which controls his investments.
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Australian M&A Activity Drops
Mergers and acquisition (M&A) activity within the Australia and New Zealand region has slowed during 2010, with the values of transactions more than halving this year.
Whilst the number of deals fell to their lowest level in over four years, according to a report authored by Thompson Reuters suggest that the number of deals first approved by company directors and later withdrawn also doubled.
According to the report nearly $45.3 billion in transactions were withdrawn over the last year, the highest level it has ever been in ten years.
The past calendar year, 2009, had the most deals withdrawn (62), compared with 52 so far this year.
The value of deals announced and followed through on so far this year is US$30.8 billion, down 52 per cent from a year earlier and its lowest level since 2006.
The value of M&A transactions for the entire Australiasian region including foreign deals was US$71.3 billion, a decline of 23 per cent from the US$93.1 worth of transactions recorded during the same period in the previous year.
According Anthony Sweetman, head of M&A for UBS, activity had been made up of predominantly cross border transactions, with foreign investment destine for Australia as opposed to overseas investment from domestic corporations.
Many bankers believe that the number of opportunities that occur for Australian companies invest internationally through a merger or an acquisition will only increase, since there has been extensive consolidation already, and the number of domestic opportunities are limited.
“You would expect the foreign investment to continue and, over time, we will see a greater proportion of outbound investment,” Mr. Sweetman said.
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Macquarie Looking To Sell Stake In Sprint Finance Corp
Australian investment banking major Macquarie is seeking offers valued at approximately US$3.5 billion for Real Estate Investment Trust (REIT) Sprint Finance Corp. If a deal is successful, it would be the largest sale of a U.S. based REIT in over three years.
The Bloomberg news service which cited unnamed sources close to the negotiations saying three publicly traded REIT’s including Lexington Realty Trust, National Retail Properties and Realty Income Corp have been approached recently. According to the sources several Private Equity firms have also expressed their interest in Sprint.
Macquarie declined to comment through its spokesperson, whilst the interested REIT’s also either declined to comment.
Sprint Finance Corp owns or finances approximately 1,200 retail properties across 45 states, The Scottsdale, Arizona-based REIT has listed assets valued at US$3.5 billion on its balance sheet., and debts of US$2.9 billion.
A consortium including Macquarie and Icelandic bank Kaupthing Bank hf acquired Sprint in 2007, for US$3.5 billion and $1.9 billion of assumed debt.
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NAB Exclusivity Arrangement With AXA Set To Expire
Australian banking major NAB, which is embroiled in an acquisition attempt of AXA Asia Pacific Holdings (APH) has said that negotiations taking place over the proposed asset divestment of APH’s Wealth.net platform were still continuing, despite the fact that the lenders exclusivity agreement with APH expires in a few hours.
NAB’s extended exclusivity agreement with AXA APH and its French parent AXA SA expires at 0001 AEST on Friday. After expiration of the exclusivity arrangement, both APH and AXA SA are then free to terminate the agreement and begin negotiations with other interested bidders.
Sydney based Australian wealth manager AMP is still considering whether it intends to submit an improved bid to APH’s board, after its initial bid which valued APH at $12.85 billion lapsed.
NAB, whose initial bid was rejected by the competition regulator on the grounds that competition would be stifled within the wealth management space was granted an extension to the original exclusivity arrangement on June 1st, to allow the lender more time to address the regulators concern and win its approval for the deal.
A spokesperson for Australia’s third largest bank told the APP that discussions with third parties over the possible sale of APH’s North and Wealth.net platforms were indeed “progressing”, but that he could not comment on what stage the negotiations were at.
NAB also remains in talks with the Australian Competition and Consumer Commission (ACCC), which on June 25 said there still was no new information that could be released.
The regulator hat still not published its public competition assessment, which is a report that provides insight into why it failed to give its approval for the proposed NAB acquisition. The regulator has not set any date for its disclosure.
The ACCC rejected NAB’s bid on the grounds the deal would substantially lessen competition for retail investment platforms for investors with complex investment needs.
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Competition Regulator To Decide On NAB Bid For AXA APH In September
The saga that has gripped the Australian wealth management industry involving the bitter take -over battle for AXA Asia Pacific Holdings between two bidders NAB and AMP, is unlikely to be resolved before September when the competition regulator consults the market regarding NAB’s proposed $14 billion bid.
The Australian quoted unnamed sources as playing down the likelihood that a new bid from NAB, one which would address the concerns that the Australian Competition and Consumer Commission’s had were imminent.
NAB is rumoured to be negotiating the sale of part of APH as part of plan that would alleviate the competition regulators worries, after its initial bid failed to receive the regulator’s blessing.
The Australian previously reported NAB had identified IOOF as its preferred buyer for APH’s North investment platform and was working towards an agreed deal.
Despite the proposal to divest certain parts of the business, the regulator needs to be satisfied such a sale would address its concerns, and this may involve sounding out the opinion of market participants, a process which may take a few weeks, after which the regulator will once again consider the matter.
NAB proposes to pay $4.6bn for APH’s Australian assets, and to sell the Asian assets to APH’s French parent AXA SA for more than $9bn.
Despite the ACCC’s failure to grant its blessing for the NAB bid not surprising many, its reasoning in not doing so did raise some eyebrows. The North investment platform has been valued at less than $50 million, yet such a small part of the APH business seems to have become the main obstacle to the deal proceeding.
IOOF remains the preferred buyer, ahead of other interested parties that include Perpetual and Count.
AMP the other bidder in the takeover battle has itself engaged in a strategy of counter attack, lobbying the regulator with the argument that the sale of the North investment platform would not have the effect of increasing competition.
The group has argued that IOOF does not have the distribution muscle or funds under management to build North into a competitor able to challenge the likes of NAB’s wealth management unit MLC, or Westpac’s BT and Asgard operations.
Both NAB and APH have the right to terminate their agreement on July 15. Failure to terminate would mean the deal is automatically extended.
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New Zealand Competition Regulator Clears AMP Acquisition Of AXA Asia Pacific Holdings
AMP the Australian wealth manager which is seeking to acquire AXA Asia Pacific Holdings (APH) received a boost to its bid, after New Zealand’s competition regulator bestowed its blessing upon the proposed deal.
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ANZ’s Chances Of Acquiring KEB Stake Improve
Australian banking major ANZ, which has grand ambitions of Asian expansion has seen the chances of it acquiring a controlling stake in Korea Exchange Bank rise sharply, after KEB said the Australian banks was a strong partner for buyout candidate.
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ANZ Indonesian Expansion Hits Road Block
Australian banking major ANZ, which has bold ambitions to transform itself into a super-regional lender, may be forced to put on hold an audacious plant to acquire a $1.4 billion stake in Indonesia’s Bank Panin, after it said its majority investor made the disclose that his stake in Panin was not for sale.
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