BNZ's parent in surprise $16b bid for Axa Asia

Four years after selling out of the wealth management business in New Zealand, BNZ Bank is looking to get back into the game with its parent National Australia Bank launching a surprise bid for Axa Asia Pacific Holdings, trumping AMP's A$12.85 billion ($16 billion) offer.

NAB said yesterday that it had reached an agreement with Axa Asia Pacific to buy its Australian and New Zealand assets in an offer worth about A$13.29 billion.

This week AMP and Paris based-Axa SA - the majority owner of Axa Asia Pacific - lifted their offer for Axa Asia Pacific from A$5.34 to about A$6.22c per share, valuing the company at A$12.85 billion.

NAB's offer will see it effectively replace AMP to team up with Axa SA in an offer that gives shareholders the option of cash and scrip, similar to the AMP proposal, or all cash.

The deal hinges on Axa SA's support and its maintaining its net cash and financial contribution as outlined in its joint bid with AMP, in return for Axa Asia Pacific's Asian assets.

Should the deal, which has been endorsed by Axa Asia Pacific's board, succeed, BNZ or its parent will become New Zealand's second largest private sector fund manager with about $7 billion under management.

Axa Asia Pacific's New Zealand arm bought BNZ Investment Management and its $2.4 billion in funds under management in late 2005. More recently BNZ returned to funds management in a modest way when NAB acquired 80.1 per cent of Goldman Sachs JBWere's private wealth management business across Australia and New Zealand earlier this year.

"The independent board committee has unanimously concluded that the NAB proposal is in the best interests of Axa Asia Pacific minority shareholders and superior to the rejected AMP/Axa SA revised proposal, in both its value and terms," Axa Asia Pacific chairman Rick Allert said in a statement yesterday.

"We believe the NAB proposal recognises the strength of this franchise and its growth prospects."

The deal would make NAB Australia's biggest superannuation and retirement income provider and funds manager, as well as consolidating its position as the country's biggest life insurer.

"We see this as a transformational and strategic deal," NAB chief executive Cameron Clyne said during a teleconference.

"It is consistent with our continued focus on the Australian market and our growing leadership positions in business banking and wealth management."

Under its plan NAB is offering Axa Asia Pacific shareholders an all-cash offer of A$6.43 a share which values the target at A$13.29 billion. Shareholders could also accept 0.1745 NAB shares and A$1.59 cash per share, which based on NAB's 10-day volume average weighted price of A$28.16 values the target at A$6.50 a share.

The offer by Melbourne-based NAB values Axa Asia Pacific's Australian and New Zealand businesses at A$4.61 billion, compared with the joint AMP-Axa SA offer valuation of A$4.41 billion.

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

Allert said NAB approached Axa Asia Pacific about replacing AMP in a takeover a "few weeks ago" and that the independent board directors had allowed it some limited due diligence. A formal offer was received late on Wednesday.

"NAB is looking to build its footprint in Australia and wealth management is one area where it's less likely to incur competition concerns," EL&C Baillieu Stockbroking analyst Stewart Oldfield said.

"The game isn't finished."

Ultimately, NAB will acquire 100 per cent of Axa Asia Pacific, merge the Australian and NZ businesses with its own, and divest the Asian business to Axa SA.

NAB finished down A$1.35 at A$26.65.

AMP gained 25c to A$6.35.

AXA Asia Pacific shares surged 12.7 per cent to A$6.37.