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NAB negotiates 'binding terms' with AXA SA for AXA Asia Pacific purchase

Wednesday 31st March 2010

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National Australia Bank and French insurer AXA SA have agreed “binding terms” for their proposed $13.3 billion acquisition of AXA Asia Pacific, which will split the wealth manager and insurer between its Asian and Australasian businesses.

AXA SA currently owns 54% of the Australian-based AXA AP. Under the terms of the deal, NAB will offer investors in AXA AP either A$6.43 a share in cash, or A$1.59 and 0.1745 of a NAB share per AXA AP share. AXA SA will then buy AXA AP’s Asian businesses for A$9.4 billion, out of which A$700 million debt owed to the French company will be repaid.

Under the terms of the agreement, AXA SA will offer to subscribe for A$600 million of unsubordinated notes issued by NAB’s wealth management business. The proposal, which is subject to minority shareholder and regulatory approval, has been recommended by AXA AP’s directors in the absence of a better one. AXA AP’s stock last traded at A$6.35 on the ASX and have advanced 76% in the past 12 months.

Last December, NAB trumped an offer of A$6.22 a share from wealth manager AMP Ltd. Since then, the deal has been simmering as the AMP offer remains on the table, while the Australian Competition and Consumer Commission said the NAB deal was a “higher level of concern” than the AMP deal.

“The proposal agreed today provides the opportunity to enhance the access to competitive wealth management products and services within Australia and New Zealand,” said NAB chief executive Cameron Clyne.  

NAB’s existing MLC wealth management unit and AXA Australia and New Zealand “are among the most trusted financial services brands in Australasia and collectively hold more than A$149 billion in funds under administration and management,” he said.

NAB will be able to use the AXA trademark in Australasia for two years, and will keep AXA AP’s 50% interest in the AllianceBernstein Australia joint venture.

Last month, AXA New Zealand chief executive Ralph Stewart told financial advisers that the company’s new owners, regardless of who they are, have no reason to shake up the business with the opportunities that are available in the life insurance market. He said he expected the deal to be finalised by June.

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