France AXA eyes Asia growth with takeover bid

By Denny Thomas

SYDNEY (Reuters) - AXA Asia Pacific rejected a $10.3 billion bid from parent AXA SA and Australian rival AMP Ltd on Monday, an initial hurdle for the French insurer's bold ambitions to expand in Asia.

AXA SA, Europe's second-largest insurer it would raise $3 billion to buy out its Asian assets in a two-stage deal which would see AXA Asia Pacific sold to AMP, then divided on geographical lines with the Australian firm keeping the Australia and New Zealand assets and selling the Asian assets back to AXA SA.

But AXA Asia Pacific's independent directors rejected the main plank of the deal saying the deal "significantly undervalued" the company.

AXA SA had tried to buy out the minorities in AXA Asia Pacific five years ago but was knocked back.

"They've obviously wanted to have at least some of the assets of AXA Asia Pacific for some time. They wanted to do it cheaply before and they're probably wanting to do it cheaply again," said Ross Barker, managing director of Australian Foundation Investment Co.

AXA Asia Pacific shares jumped 30 percent on news of the takeover bid, with the market punting on AMP and AXA improving the offer.

AXA SA holds its Asian operations through its stake in Australia-based AXA Asia Pacific Holdings but now wants to own these assets outright, doubling its exposure to Asian life insurance savings, including in China and India.

"The proposal has been received against the backdrop of recent weakness in global financial markets and before the growth of our Asian operations is fully reflected in our profitability," AXA Asia Pacific Chairman Rick Allert said in a statement.

With the buyout, AMP would buy all of the shares in the Asia Pacific unit, including the parent's 53 percent stake in a deal worth $10.3 billion, and then sell AXA Asia Pacific's Asian assets back to the French parent.

"The Asian assets are attractive," said Mark Daniels, head of Australian equities for Aberdeen Asset Management.

"That's one of the reasons why you'd hold AXA (Asia Pacific). They've got a very good business in Hong Kong and other Asian businesses are coming on track," Daniels added.

In a separate development, AXA's 15.6 percent stake in China's No.4 life insurer, Taikang, attracted foreign and domestic bidders, including Temasek and Blackstone, valuing the holding at more than $1 billion, sources told Reuters.

"A BIT LIGHT"

AMP's cash-and-shares offer for all of AXA Asia Pacific, the first stage of the deal, implied a bid of A$5.43 per AXA Asia Pacific share, valuing the target firm at A$11.2 billion ($10.3 billion), based on AMP's closing share price on Friday. AMP is offering a 26 percent premium to AXA's close on Friday.

AXA's shares surged 33 percent to close at A$5.70, their highest since the collapse of Lehman Brothers.