Australian regulators rejected National Australia Bank’s (NAB) US$12.2 billion bid for financial firm AXA Asia Pacific on competition concerns yesterday, in a move welcomed by rival suitor AMP.
The Australian Competition and Consumer Commission (ACCC) said NAB’s suggestion of divesting key technology, after the takeover was initially rejected in April, had failed to ease competition fears.
“The proposed undertakings offered by the parties do not provide sufficient certainty that the ACCC’s competition concerns will be addressed,” ACCC deputy chairman Peter Kell said.
AXA Asia Pacific’s French owner AXA SA and NAB agreed in March on the buyout, under which AXA SA would take its subsidiary’s Asian arm, while NAB would control its Australian and New Zealand businesses.
The ACCC blocked the move, but said it would reassess the situation if AXA Asia Pacific sold its specialized investment platform, North, to IOOF Holdings Ltd.
However, the commission yesterday said a “majority” of industry members it consulted remained concerned that the sell-off of North would “not provide for an effective competitive constraint.”
The deal would have been the largest ever takeover in Australia’s financial services sector and would have made NAB one of Australia and New Zealand’s leading wealth management groups.
Rival bidder AMP called the ACCC decision a “great outcome for competition” and said it still regarded AXA, for which it offered US$11.5 billion, as a lucrative investment.
“AMP has always said AXA remains strategically attractive, but at the right price,” an AMP spokeswoman said.
However, she said renewing AMP’s push for AXA was “a decision for another day” and there was no urgency on the matter. An exclusivity agreement preventing AXA from soliciting other bids expired at midnight yesterday and the ACCC has already green-lighted AMP’s offer.
NAB, Australia’s fourth-largest bank, said it was “considering the implications of this decision” and would provide an update as soon as possible, a response echoed in a statement by AXA Asia Pacific.
Investors flocked to NAB after the news, driving its shares up 3.72 percent to A$24.84 (US$22.78). AXA shares closed 6.62 percent lower at A$5.08 and AMP was flat at A$5.04, in a broadly higher market. Analysts have said NAB’s offer overvalued AXA.
Even without North, analysts have said NAB and AXA Asia Pacific’s combined platforms account for more than 25 percent of the market.
North is a wealth management technology linking financial planners and ordinary or retirement investors with more than 130 products, with initial capital and contributions guaranteed against market volatility.
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