To reinforce AXA’s growth profile by doubling its exposure to the Asian Life & Savings market
AXA has announced that a joint offer was submitted by AMP and AXA to the AXA Asia Pacific Holdings (AXA APH) board on November 6, 2009. Under this arrangement both companies have agreed that, if the offer is successful, AXA would take ownership of 100% of the Asian business and AMP would take ownership of 100% of the Australia & New Zealand business.
The company said, if successful, this offer would be equivalent to AXA selling its 54% stake in AXA APH’s Australia & New Zealand business while acquiring the 46% of AXA APH’s Asian operations that AXA does not own for a net cash payment of €1.1 billion.
According to the AXA, the joint offer submitted to the AXA APH board contemplates a Scheme of Arrangement pursuant to which AMP would acquire 100% of AXA APH’s outstanding shares for AUD$11.0 billion, with the objective of retaining and integrating the Australian and New Zealand operations. AMP would buy AXA’s shares in AXA APH for AUD$6.0 billion in cash.
In addition, as part of the transaction, AXA would acquire from AMP 100% of AXA APH’s Asian operations for AUD$7.7 billion in cash, with the objective of increasing its exposure to high growth markets.
AXA said that the price offered by AMP to AXA APH’s minority shareholders is AUD$5.34 per share of which 26% would be paid in cash and 74% in AMP shares. This offer provides a 31% premium to AXA APH’s minority shareholders. Net cash consideration paid by AXA would be AUD$1.8 billion, corresponding to the difference between the value of 100% of AXA APH’s Asian operations, and the value of 54% of AXA APH.
In addition, as part of the transaction, AXA APH would reimburse the AUD$0.7 billion internal loan granted to it by AXA and AXA would subscribe AUD$0.5 billion of lower Tier 2 subordinated debt to be issued by AMP.
Reportedly, if the transaction is successful AXA would have impact of accretive on earnings per share in 2010, -1 pt on Solvency I, which was slightly above 140% at September 30, 2009, +2 pts on debt gearing, which was 31% at June 30, 2009.
AXA has agreed to enter into an exclusivity arrangement with AMP for the purpose of this offer. The offer can be withdrawn by AXA and/or AMP at any time. This transaction is expected to double AXA’s exposure to high growth Asian Life & Savings markets with no integration risk.
The contemplated transaction would double Asia’s contribution to Group Life & Savings top line and earnings APE from 3% to 6%, NBV from 12% to 21%, and Life & Savings underlying earnings from 6% to 11%, the company said.
Henri de Castries, chairman of the AXA Management Board, said: “This transaction would reinforce AXA’s growth profile by doubling its exposure to the Asian Life & Savings market and further optimize the corporate structure of the Group. The proposed transaction offers to AXA APH’s minority shareholders a significant premium and the opportunity to become shareholders of a larger and stronger AMP Group which will permit them to share directly in the significant synergies that this transaction would create.”
This transaction is expected to simplify AXA’s corporate structure in Asia, where the Group also holds both insurance and asset management businesses directly.