AXA-NAB extend $11.5 billion takeover deal to Aug 31

SYDNEY (Reuters) - National Australia Bank (NAB.AX), takeover target AXA Asia Pacific AXA.AX and France's AXA SA (AXAF.PA) agreed to extend an $11.5 billion acquisition agreement to Aug 31, signaling they were far from resolving regulatory obstacles.

The eight-month long deal for domination of the $1 trillion and fast growing Australian wealth management sector, the world's fourth-largest was blocked by the Australian Competition and Consumer Commission (ACCC) in April.

In a sign of how uncertain the deal is, the three companies have extended the deadline for implementation of the agreement -- shareholder and court approval -- to January 2011

The separate announcements on Monday from AXA Asia Pacific, a unit of France's AXA SA, and NAB were on expected lines and mark the second extension for the deal. The previous agreement expired on July 15.

"You could possibly read it as that they are confident of meeting the ACCC's concerns. But this could very well be the last extension," Arjan Van Veen, a sector analyst at Credit Suisse said.

"It is probably fair for NAB to have some more time but personally I think it is difficult to get the deal done."

Delays have upset AXA SA's Asia strategy and NAB's bid to grab one of the last remaining consolidation opportunities in Australia's financial services sector. Wealth management is expected to grow at over 10 percent compared to under half that for loans.

AXA SA has earmarked Asia for growth and under the deal will buy back AXA Asia Pacific's Asian operations from NAB, which will be left with the Australian and New Zealand Operations. Delays in this deal upset AXA SA's Asia strategy.

STIFF TASK

AXA Asia said NAB was pursuing all options to meet concerns over a lack of competition in retail platforms -- an internet portal that binds the wealth manager and client.

The ACCC in April favored a lapsed bid by No.2 wealth manager AMP (AMP.AX), which maintains it is still interested in AXA Asia but is yet to come up with a counter offer, thus limiting options for AXA SA.

NAB has said it is in talks to sell AXA's North retail platform, while sources have indicated smaller fund manager IOOF Holdings (IFL.AX) was tipped to buy the platform. But no agreements have been reached yet.

Some analysts have said selling North would not pass muster with the ACCC, given it is quite small and a likely buyer of the platform was unlikely to spur competition.

An NAB-AXA combination would have a 21-percent share of the retail funds market and 15 percent of the wholesale funds market, almost twice the size of the nearest competitor. The deal would be Australia's second-largest financial services deal ever.

The three companies have also agreed for AXA to pay an interim dividend of up to 9.25 cents, equal to the amount paid since September 2008 and in line with analyst expectations, if AXA Asia Pacific's board also supports the dividend payment.

The announcement comes as some relief to AXA shareholders who have faced months of uncertainty and also seen the share price drop almost 18 percent since mid-April.

AXA Asia shares were 0.6 percent lower at A$5.22 in line with the broader market and NAB dropped 1.4 percent, in line with its banking sector peers.

(Reporting by Narayanan Somasundaram; Editing by Ed Davies and Dhara Ranasinghe)