Melbourne-based National Australia Bank and French insurance firm Axa have agreed to a two-stage, multi-billion dollar deal that will see NAB acquire Axa's Australia and New Zealand businesses, while Axa will retain the Asian portion of the business.
The deal is structured in two stages. First, NAB will buy 100% of Axa Asia Pacific Holdings (Axa APH) for A$7.2 billion ($6.6 billion), based on a per-share price of A$6.43. The acquisition price values Axa APH at about A$13.3 billion. Axa APH shareholders have the option to receive either A$6.43 in cash or A$1.59 in cash plus 0.1745 NAB shares for each Axa APH share they own. Axa owns 54% of Axa APH, while the balance is widely dispersed.
Second, Axa will buy back 100% of the Asian assets included in Axa APH, referred to as Axa Asia Pacific, for A$9.4 billion.
At the end of the deal, NAB is effectively gaining ownership over Axa's Australia and New Zealand wealth management and insurance businesses, including the advice businesses of ipac, Genesys, Axa Financial Planning and Charter Financial Planning. NAB has negotiated the right to use the Axa trademark in Australia and New Zealand for a two-year transition period. NAB also intends to retain the 50% interests Axa Asia Pacific owns in the Alliance Bernstein Australia joint venture.
Axa continues to control, albeit now with a 100% ownership, the life insurance and wealth management businesses in Hong Kong, China, Singapore, Indonesia, the Philippines, Thailand, India and Malaysia.
The French insurance conglomerate acquired the Asia-Pacific business in 1995 via the acquisition of National Mutual, a mutual company established in 1869. It went on to brand the business Axa in 1999. The Asia-Pacific business currently employs 2,300 people in Australia and New Zealand and 1,900 across Asia.
In December last year NAB made a late entry into the fray for Axa's Australia and New Zealand business. Axa was at the time already in exclusive discussions with Australian wealth manager AMP on a similarly structured deal where it would also be able to retain the Asian assets. NAB trumped the AMP bid of A$6.22 per share, repeating its success in June when it was the winning bidder for Aviva's Australian life, pensions and wealth management businesses.
On a net basis, Axa is paying A$2.2 billion to buy back the Asian assets, which is the same amount it had agreed with AMP.
The bid is still subject to receipt of relevant regulatory approvals including approval from the Australian Competition and Consumer Commission (ACCC). The ACCC yesterday said it was deferring a decision on the bid until April 22. Rival bidder AMP has highlighted that it believes its bid will create a more competitive playing field and thus serve Australian customers better. ''The ACCC is continuing to receive relevant information and will make a decision as soon as all relevant information has been considered,'' the regulator said in a statement.
This is NAB's third acquisition in the past 12 months, as the firm aggressively seeks to consolidate its position in its home market. In June last year it paid A$925 million for Aviva's Australia business. Just over a month later it paid A$99 million for an 80.1% interest in the private wealth management business of Goldman Sachs JB Were in Australia and New Zealand.
Axa is being advised by Deutsche Bank, while Axa APH is being advised by Macquarie. J.P. Morgan, which earlier sat across the table from NAB as an adviser to Aviva on the sell-side, is now advising NAB on the buy-side. AMP is advised by UBS and Caliburn Partnership.