National Australia Bank Limited (NAB) has agreed binding terms with the French parent company AXA (AXA), and AXA Asia Pacific Holdings Limited to purchase the Australian and New Zealand businesses of AXA APH for $4.6 billion1 as part of a proposal to acquire all of the shares in AXA APH. As part of the proposal AXA has agreed to purchase the Asian businesses of AXA APH for $9.4 billion, out of which the $0.7 billion AXA APH A&NZ debt to AXA will be repaid. NAB will therefore acquire AXA APH A&NZ without debt.
NAB will acquire AXA APH’s A&NZ wealth management and insurance businesses (including the Australian mature business). This includes the advice businesses of ipac, Genesys, AXA Financial Planning and Charter Financial Planning. NAB will be able to use the AXA trademark in Australia and New Zealand for a period of 2 years to assist with transition. Subject to agreeing new joint venture arrangements, NAB will retain AXA APH’s 50% interest in the AllianceBernstein Australia joint venture.
AXA will also offer to subscribe for $600 million of unsubordinated notes issued by National Wealth Management Holdings Limited (NWMH). The proposal is subject to AXA APH minority shareholder approval. The Independent Directors Committee of AXA APH unanimously recommended that AXA APH minority shareholders vote in favour of the NAB proposal, in the absence of a superior proposal and subject to a favourable independent expert’s opinion. The proposal is also subject to various other conditions and regulatory approvals, including the approval of the Federal Treasurer and that there is no objection to the merger from the ACCC or APRA. A break fee of $35 million is payable to NAB by AXA APH in certain circumstances.
Cameron Clyne, NAB Group CEO said: “I am pleased with the progress we have made in our proposal to acquire the Australian and New Zealand businesses of AXA Asia Pacific and agreement of binding terms with AXA is an important milestone. “MLC and AXA Australia and New Zealand are among the most trusted financial services brands in Australasia and collectively hold more than $149 billion in funds under administration and management2. “The proposal agreed today provides the opportunity to enhance the access to competitive wealth management products and services within Australia and New Zealand. It is also an attractive, strategically aligned opportunity that enhances NAB’s activities in the growing wealth management industry,” he said.
Under the terms of the proposal, AXA APH minority shareholders will have the option to receive either cash of A$6.43 per AXA APH share or A$1.59 in cash and 0.1745 NAB shares per AXA APH share (subject to potential adjustment if NAB conducts an equity raising). AXA APH shareholders who elect to receive the cash and NAB share consideration under the proposal will also be entitled to receive the value of NAB’s 2010 interim dividend.