AMP May Itself Become Target In The Wake of AXA Asia Pacific Bid

Post by Sharat on November 10, 2009 · Under Business News, Capital Markets, Company News, Equities, Mergers & Acquistions, Wealth Management · 1 Comment

Shares of Australian wealth manager AMP surged over 4 per cent during Tuesdays trading session, driven by speculation that the company itself could be the target of a takeover, after launching an audacious $11 billion joint acquisition attempt with Paris based AXA SA for AXA Asia Pacific Holdings (APH).

Some analysts believe that the Big Four Banks are circling AMP and a bid for the company may be imminent.

On Tuesday market participants awaited a revised takeover bid for APH, after APH rejected the initial proposal, claiming the stock and cash bid significantly undervalued the group.

The $5.34 a share proposed price is well below AXA APH’s Tuesday closing price, after the stock leapt 32.5 per cent during Monday’s trade.

AMP’s shares finished 27 cents, or 4.41 per cent higher at $6.39 on Tuesday on the speculation of a possible bid, IG Markets’ analyst Ben Potter said.

On Monday CBA ruled itself out of a possible bid for AMP, after chief executive Ralph Norris outright denied the lender was interested in such an acquisition

“We’re happy with where we are in the wealth management space,” he said.

A sweetened bid for AXA APH from its parent, Paris-based AXA SA and partner AMP, is more likely, broker Merrill Lynch said.

AXA SA, Europe’s second biggest insurer, is the largest shareholder of AXA APH and owns 53.93 per cent. Together with AMP, the bidders put a cash and share proposal to AXA APH’s board last Saturday that valued the target at $5.34 each.

The initial bid was unsolicited and rejected by the board of AXA APH, though indications were left that the company would be open to a deal on better terms.

Andrew Penn AXA APH chief executive said an appraisal of the company valued it at between $4.80 to$5.75 a share.

If successful, the acquisition would see AXA APH’s minority shareholders get 0.6896 AMP shares plus $1.3796 in cash for every AXA APH share they own.

Investment bank Merrill Lynch said that support of AXA PH’s minority shareholders would be needed in order to for the bid to be successful, and that would most likely mean a higher price, which would probably not exceed $6.00 a share.

“We cannot envisage an offer for AXA APH above $6.00 a share flying with either AMP or AXA SA shareholders,” the broker said.

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