AMP, AXA deal would send jobs across Tasman

A merger between AMP and AXA Asia Pacific would lead to more financial services jobs moving to Australia, following the example of the big banks, analysts say.

AMP and France's AXA SA have unveiled a sweetened A$12.9 billion (NZ$16.2b) bid for AXA Asia Pacific, but may be feeling disappointed after the Australian wealth giant refused to give its immediate endorsement for the increased bid.

AMP has about 74,000 shareholders and more than 400,000 customers in New Zealand.

Investment specialist Arthur Lim said the merger probably represented the last consolidation in the insurance and funds management industry.

"New Zealand is now seen very much as part and parcel of an Australasian entity."

A merger between AMP and AXA Asia Pacific would speed up the transfer of more services to Australia.

One of AXA Asia Pacific's key fund managers in New Zealand, AllianceBernstein recently announced plans to close down asset management in New Zealand, involving New Zealand shares and fixed income investments.

Axa Asia Pacific in New Zealand handles the retail distribution of the funds for investors and puts their money with a variety of different fund managers. French company Axa owns 64 per cent of United States-based AllianceBernstein

"It wouldn't be surprising sometime in the future if AMP itself pulls stumps and manages its whole funds management out of Australia," Mr Lim said. It was all about economies of scale and centralisation, leading to more jobs going to Australia.

"That is a continuation of what we have seen within the finance and banking sector over the years where there has been a migration of intellectual capital to Australia."

Credit Suisse analyst Arjan van Veen said the merger, if completed, would consolidate the New Zealand life and funds management market, and could lead to further rationalising of life insurance commissions.

The three-way deal, which is aimed at carving up AXA Asia Pacific's Australian and Asian assets, puts an additional A$1.3b in cash and shares on the table compared to its original offer, which was launched last month.

A combined AMP/AXA Australian operation would emerge as a key player in the funds management and life insurance markets. AMP has said the company would emerge as an effective "fifth pillar" in Australian financial services.

While the offer was given to AXA Asia Pacific independent directors on Friday, the board said it would mull the offer.

This suggests the offer is by no means the "knockout" blow AMP and AXA were hoping for. The bidders have declared this their best and final offer.

AMP and AXA SA increased the pressure on AXA Asia Pacific chairman Rick Allert to accept the deal, saying that if the proposal was not accepted and recommended by December 21, it would consider the offer rejected and it would lapse. The accelerated timeframe appears designed to thwart a major bank from launching a bid for AMP.

The revised offer equates to A$6.22 a share based on Friday's close. This is made up of A$1.92 in cash and 0.6896 AMP shares per AXA Asia Pacific share.

The original offer was for A$5.35 a share, at the time representing a 31 per cent premium to the AXA Asia Pacific pre-bid share price.

Under the sweetened offer the cash component has been increased by A$515 million or 54 cents a share. Most of the increase has come from France's AXA SA, which tipped in A$415m, while AMP contributed an additional A$100m.

This will place a valuation on AXA's operations across Asia of A$9.6b, including debt, while the Australian business is valued at A$4.4b.

- © Fairfax NZ News