Axa Asia Pacific Strikes Takeover Deal With National Australia Bank and Axa SA

National Australia Bank and Axa SA [085085] have agreed to acquire Axa Asia Pacific Holdings Ltd.'s [086639] Australia and New Zealand businesses and Asian operations, respectively.

As part of the deal, NAB will buy Axa SA's shares in Axa Asia Pacific for A$7.2 billion (US$6.6 billion) in cash. The French parent owns 54% of Axa Asia Pacific's shares.

Paris-based Axa SA will then buy Axa Asia Pacific's Asian operations for A$9.4 billion in cash from NAB, according to Axa SA. The acquisition is subject to shareholder and regulatory approvals and other conditions.

NAB said it will pay A$4.6 billion for Axa Asia Pacific's Australia and New Zealand operations. The bank will acquire these two operations without the A$700 million debt owed by Axa Asia Pacific to Axa SA, which is accounted for in the price Axa SA will pay for the Asian assets.

NAB's offer is A$6.43 cash per Axa Asia Pacific share, or 0.1745 of an NAB share and A$1.59 cash per Axa Asia Pacific share. NAB's offer beat the A$6.22 bid by AMP Ltd. [085737] made last December (BestWire, Dec. 18, 2009).

After the transaction, NAB will acquire Axa Asia Pacific's Australia and New Zealand insurance businesses, with the right to use the Axa trademark for a period of two years to assist with transition. NAB will retain Axa Asia Pacific's 50% stake in an AllianceBernstein Australia joint venture in investment management business, subject to new joint venture arrangements.

The acquisition proposal provides NAB "the opportunity to enhance access to competitive wealth management products and services," said Cameron Clyne, group chief executive of NAB. The deal is "an attractive, strategically aligned opportunity," he added in a statement.

In 2009, Axa Asia Pacific reported a profit after taxes and nonrecurring items of A$679.2 million, compared with a loss of A$278.7 million in 2008, on the strength of increased in sales and effective cost reductions (BestWire, Feb. 18, 2010).

Meanwhile, the Bank of Queensland has agreed to acquire St Andrew's insurance business from Commonwealth Bank Group as part of the bank's growth strategy in financial services.

St Andrew's Insurance (Australia) Pty Ltd. and St Andrew's Life Insurance Pty Ltd. will be acquired for an undisclosed amount. The transaction is expected to close around July 2010, subject to sales conditions and regulatory approval.

St Andrew's provides consumer credit insurance, life insurance and other related protection products through a base of financial institutions that distribute its products.

The purchase of the St Andrew's insurance business fits within the bank's growth strategy, said David Liddy, managing director of Bank of Queensland.

"The majority of St Andrew's premiums are in credit protection products, addressing a significant customer need that has been growing in light of the global financial crisis and which is aligned to Bank of Queensland's housing and small-to-medium enterprise target segments," said Liddy in a statement.

After the transaction, St Andrew's will operate as a stand-alone entity and the insurer's Perth-based headquarters and existing presence across the country will be retained, said Liddy.

St Andrew's mainly distributes its credit protection products through a business-to-business model. There will be potential to expand distribution of life products through direct channels, including online facilities, according to Bank of Queensland.

The acquisition does not cover St Andrew's investment, superannuation, retirement income and financial planning businesses, which are integrated into Commonwealth Bank's wealth management business.

As part of the deal, Bankwest will maintain its existing distribution partnership with St Andrew's through an exclusive long-term distribution agreement.

(By Iris Lai, Hong Kong bureau manager: [email protected])