NAB Will Respond Within Days to Regulator Decision to Block Axa Takeover
Stock Chart for AXA SA (CS)
National Australia Bank Ltd. will respond within days to the rejection by the country’s regulator of the bank’s planned A$13.3 billion ($12.3 billion) takeover of Axa Asia Pacific Holdings Ltd.
“All the options are being considered at this stage,” Steve Tucker, group executive of NAB Wealth, told the Australian Broadcasting Corp.’s Inside Business program yesterday. “We’ll let the market know in the next few days as to which option we’re going to take.”
The options open to National Australia Bank are to challenge the verdict, offer more concessions to ease competition concerns or drop the purchase completely, Tucker said.
Ten months after agreeing to the takeover, many analysts expect National Australia Bank, the country’s fourth-largest, to abandon the plan. That would leave the Melbourne-based lender to focus on its wealth-management businesses and open the way for rival AMP Ltd. to make a fresh bid for Axa Asia Pacific.
“We expect that NAB, after consideration, will likely let the deal rest now rather than challenge via the courts,” Craig Williams, an analyst at Citigroup Inc., said in a Sept. 10 report. “There is ample opportunity available in integrating its existing wealth businesses and better executing its banking strategies.”
The Australian Competition & Consumer Commission blocked the deal, after opting to consult National Australia Bank’s rivals, because it was concerned National Australia Bank would have too much control of the domestic wealth-management market.
“I guess we’ll abide by the umpire’s decision on that,” Tucker said.
National Australia Bank stock rose on Sept. 9 in Sydney trading when the regulator announced its decision, as concern eased that the bank will have to sell stock to fund the purchase, which some analysts had judged expensive. The bank fell 0.7 percent to A$24.67 on Sept. 10. Axa Asia Pacific rose 0.4 percent to A$5.10. AMP fell 0.8 percent to A$5.
National Australia Bank’s cash offer in December won over Axa Asia Pacific’s independent directors, who rejected AMP’s cash and stock bid of A$12.9 billion. The competition watchdog then blocked the bank’s approach twice, even as it pledged to sell one of the target’s assets to ease antitrust concerns.
Asked why he didn’t offer more to win over the regulator, Tucker said the bank had sought not to erode the benefits of the transaction by giving too much away.
“We’ve worked hard with them over the last few months to come up with a package that we thought would satisfy their concerns,” Tucker said. “You have to be careful to get the balance between satisfying the concerns of the ACCC and keeping the integrity of the value of the deal in place.”
To squeeze the takeover through, National Australia Bank had offered to sell Axa Asia Pacific’s North investment platform, an online portal overseeing A$1.4 billion of funds, to smaller asset manager IOOF Holdings Ltd. With that solution rejected, Tucker said National Australia Bank will expand with its existing assets.
“We’ll continue to compete and grow quite vigorously in the markets organically,” Tucker told yesterday’s Inside Business program. “We’ll just continue to go on and compete.”
National Australia Bank and AMP were pursuing a wealth manager with A$78.4 billion of assets, most of them in Australia. They both planned to keep the Australian and New Zealand units and sell eight Asian divisions to Axa SA, the French insurer that owns 54 percent of Axa Asia Pacific.
Analysts including Williams at Citigroup have said the regulator’s blocking of the deal represented a rejection of increased market dominance by National Australia Bank, Westpac Banking Corp., Commonwealth Bank of Australia and Australia & New Zealand Banking Group Ltd.
Speaking to the same Inside Business program, ACCC Deputy Chairman Peter Kell denied the regulator was opposed in principle to any of Australia’s biggest banks becoming larger.
“Of course the ACCC is very much interested in competition in the finance sector,” Kell said on the program. “It’s an area of strong concern to the wider community, but we assess each matter on its merits. We didn’t believe the undertakings would set up IOOF with significant competitive force.”
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