AXA eyes Asia growth via asset deal

By Denny Thomas and George Chen

SYDNEY/HONG KONG (Reuters) - French insurer AXA (AXAF.PA) bid for full control of its majority-owned Asian arm on Monday, seeking a tighter grip on the region's strong growth potential.

The insurance market in Asia is growing faster than Europe and the United States, with Ping An Insurance (Group) Co of China Ltd (601318.SS) and China Life (601628.SS) strong rivals.

AXA announced a two-stage deal: First, AXA's regional partner AMP (AMP.AX) of Australia will buy all of AXA Asia Pacific (AXA.AX), including the 54 percent owned by parent AXA, in a deal valuing the target at about $10.3 billion (6.2 billion pounds). Then, AMP will sell most of the business to AXA for about $7 billion, keeping the Australian and New Zealand units for itself.

AXA Asia Pacific rejected the proposal, saying it undervalued the business, but analysts said it was likely the parties involved would find an agreement.

The deal has an implied value of A$5.43 per AXA Asia Pacific share. The stock soared 32.5 percent to A$5.70, well above the offer price.

"The deal will probably get done, although AXA won't be prepared to overpay," said Mandarine Gestion fund manager Fabienne Girard-Tokay.

"AXA Asia Pacific is one of the jewels in the crown and it's a very good idea to buy out the minority shareholdings," added Girard-Tokay, whose firm owns AXA shares.

An AXA spokesman in Paris declined to comment on whether the initial offer for AXA Asia Pacific would be raised.

AXA RIGHTS ISSUE

AXA will finance the buyout plan for its Asia Pacific subsidiary by a 2 billion euro (1.78 billion pound) rights issue.

The rights issue was set as a 1-for-12 issue at a price of 11.90 euros -- a discount of around 30 percent to AXA's closing share price on Friday of 16.88 euros.

AXA was down 1.2 percent at 16.68 euros in early trade in Paris.

AXA said the rights issue would also give it cash for acquisitions in other fast-growing areas, such as central and eastern Europe.

"AXA's exposure to fast-growing markets is weak," CM-CIC Securities said in a research note. "This deal, along with others made possible by the rights, will help AXA significantly increase its market share," added CM-CIC, which raised its rating on AXA to "buy" from "accumulate."

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