AMP, AXA SA to discuss joint move on AXA AP

AMP will seek talks with France's AXA SA to gauge its commitment to an agreement that locks the two in as partners for an attempted move on AXA Asia Pacific, even after the pair were trumped last week by National Australia Bank.

The wealth giant's self-imposed deadline expires today. However, the passing is a mere formality given its joint $12.8 billion scrip-and-cash offer for AXA Asia Pacific has already been eclipsed by NAB.

AMP chief executive Craig Dunn is believed to be in no hurry to respond to NAB's surprise bid for its rival, knowing the exclusivity agreement with AXA SA runs until February 6.

Indeed, it is believed the AMP board's preference is to wait until the New Year before plotting its next step.

AMP is mulling whether to come back with a new offer on AXA Asia Pacific, but it is reluctant to enter into a bidding war with the cashed-up NAB. Analysts have said AMP is limited in how much cash it can pay, which is a clear preference of the AXA Asia Pacific board.

Still, by rejecting AMP and AXA SA's joint takeover offer last week, AXA Asia Pacific chairman Rick Allert has paved the way for the bid partners to return to the negotiating table.

"We believe the most likely outcome is for AMP to return with a higher offer given the attractiveness of the assets and the threat of becoming a target themselves," said RBS analyst John Heagerty. Mr Heagerty calculates AMP could pay up to $6.60 a share for AXA Asia Pacific and still make the transaction neutral to earnings by 2011, if it can extract deeper cost savings.

AMP's least preferred option is to walk away ahead of the expiry of its exclusivity agreement with France's AXA SA.

At the same time, the wealth giant hopes the competition regulator will take a dim view of a major bank snaring an even greater share of the financial services sector and this could put AMP back in the running.

NAB is aiming to become the leader in the nation's superannuation and retirement savings industry after launching a $4.6 billion takeover bid for AXA Asia-Pacific. The NAB deal hinges on it being able to persuade AXA SA to drop AMP as its bidding partner. This would allow NAB to on-sell the Asian assets of AXA Asia-Pacific to the French giant for $8.6 billion.

AXA SA has said it is considering its position.

On Friday's close, the rejected AMP and AXA SA proposal implied a share value of $6.41. While NAB is offering $6.50 for each AXA share in cash, capital gains tax is likely to reduce this to about $6.41 a share.

Meanwhile, falls in NAB's share price over the past week has seen the value of its cash and share offer come in at $6.13 a share.

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