AMP resumes talks over $10 billion AXA-Asia Pacific bid

By Michael Smith

SYDNEY (BestGrowthStock) – Australian wealth manager AMP has resumed $10 billion-plus talks to buy AXA Asia Pacific, the target company confirmed on Friday, although a source said both sides were a long way from agreeing on a deal.

Analysts remain skeptical about whether AMP can meet AXA’s price expectations after its original cash-and-share offer a year ago was trumped by a $12 billion bid by National Australia Bank.

AMP re-entered the fray after NAB’s bid failed in September due to repeated rejections by the competition watchdog worried about a concentration of power in Australia’s $1 trillion wealth management industry.

Under AMP’s previous offer, France’s AXA SA would acquire AXA Asia Pacific’s Asian operations while AMP would be left with the Australian and New Zealand operations.

AXA, Europe’s second-biggest insurer, wants to focus on Asia where it has operations in eight countries and where the wealth management and insurance businesses are growing fast.

AXA Asia Pacific said in a statement on Friday it was aware of fresh discussions between its French parent and AMP.

While it was the first official confirmation talks had resumed, the move had been well-flagged in unsourced media reports and had little impact on the target’s share price.

AXA Asia Pacific shares were steady at A$5.61 at 11:55 p.m. ET on Friday, while AMP was down 1.1 percent at A$5.29, both trailing the broader market’s 1 percent gain.

AMP’s lapsed cash-and-shares offer would be worth about A$5.64 per share at current market prices, or A$11.6 billion ($11.8 billion). NAB’s offer was worth A$6.43 a share.

SOME WAY OFF

A source close to the deal told Reuters it was too early to speculate about the timing of any deal and both sides were some way off to agreeing on price.

Analysts predict a successful bid could came halfway between AMP’s original offer of around $10 billion and NAB’s failed $12 billion price.

“The key thing is AMP have said they don’t want to pay more and AXA have said they want a high price. The other sticking point is cash. AXA wants cash,” said one analyst, who did not want to be identified.

Sources told Reuters in September that AMP would not make an all-cash offer, but could only offer more of its shares to improve its bid.

The other wildcard is how much AXA SA would be willing to tip in to buy AXA’s Asian operations from AMP.

Analysts said AMP would have issues funding a deal. Its share price has fallen 17 percent this calendar year so far, weakening its bidding power.

AMP wants AXA Asia Pacific for its Australian and New Zealand businesses, which would vault AMP to top position in Australia’s wealth management market.

AXA SA, which owns 54 percent of AXA Asia Pacific, is targeting Asia for expansion but has been stymied by delays in exiting the mature businesses of Australia and New Zealand.

(Additional reporting by Victoria Thieberger; Editing by Lincoln Feast)

AMP resumes talks over $10 billion AXA-Asia Pacific bid