SYDNEY National Australia Bank's (NAB) $12 billion bid for AXA Asia Pacific has been blocked for a second time, dashing its efforts to cement its lead in the world's fourth-largest wealth management market.
The Australian competition regulator's decision clears the way for Australia's second-biggest fund manager AMP to take another tilt at AXA Asia Pacific, after its cash and share offer was trumped by NAB in December.
The ruling dealt another blow to French insurer AXA SA's plans to expand in Asia. It was to pick up its unit's fast-growing Asian assets as part of the bid with NAB, looking to get a tighter grip on the region's booming markets.
"It is AXA's strategy of redeploying in Asia that is at stake," CA Cheuvreux analyst Jean D'Herbecourt said in a note. "AXA now has to re-open negotiations with AMP that will need to be validated by an independent board of AXA APH."
AXA Asia Pacific shares tumbled as much as 10 percent to levels not seen since it was put in play last year as investors bet NAB would give up its nine-month fight for the company.
"It is time for NAB to move away from this bid. It has been nearly a year and they don't need more distractions," said Tom Elliot, managing director at hedge fund MM&E Capital.
Australia's top four banks are looking to increase their sway over the $1.2 trillion wealth market, seen growing more than 10 percent annually for the next five years on compulsory pension contributions.
AXA SA, which owns 51 percent of AXA Asia Pacific, said it was reviewing its options on how to expand in Asia. An agreement between AXA SA, its unit and NAB expires on Thursday.
An unsourced Australian Associated Press report said AMP may make a fresh bid for AXA Asia Pacific as early as Friday. An AMP spokeswoman declined comment, only saying the AXA unit remained of strategic interest at the right price.
"We don't know what our next steps are, it's too early to say," an AMP spokeswoman said.
Moreover, with a 25 percent fall in its share price so far this year, AMP may struggle to come back with an acceptable bid.
"It's hard for them to do a deal that would satisfy the board," said Rohan Walsh, investment manager at Karara Capital.
NAB, led by Cameron Clyne, a former rugby player and keen ocean swim racer, could contest the ruling, but analysts and investors expect the lender to bow out of what would have been the second-largest deal in Australia's financial industry.
"We expect that NAB, after consideration, will likely let the deal rest now rather than challenge via the courts," Citigroup analyst Craig Williams said.
NAB shares rose as much 4.6 percent to a one-month high on relief it would not have to raise more equity. AXA Asia Pacific shares trimmed some losses to end down 6.6 percent at A$5.08, well below NAB's A$6.43 a share offer. AMP shares were steady.
AXA SA shares fell 1.9 percent to 12.77 euros in a firmer Paris market.
The Australian Competition and Consumer Commission last month agreed to consult the market on NAB's undertaking to sell AXA Asia Pacific's North Platform, which administers A$1.36 billion, to smaller wealth manager IOOF Ltd.
The regulator had blocked the deal in April in favor of AMP's offer, citing concerns over competition in retail investment platforms -- a portal that binds the wealth manager, financial products and customers.
"The ACCC ... remains opposed because it would be likely to result in a substantial lessening of competition in the relevant retail investment platform market," ACCC Deputy Chairman Peter Kell said in a statement.
A combined NAB-AXA Asia Pacific would have a 21 percent share in the retail funds market and 15 percent of the wholesale funds market, almost twice the size of the nearest competitor.
If AMP does not come back with an acceptable bid, AXA SA may again try to buy out minority shareholders in its Australian unit, which manages A$78 billion and last year reported its biggest profit since 2003. Its two previous attempts failed.
"They (AXA SA) are obviously still interested in the Asian assets. I'm not very sure what could be done on that front," Karara Capital's Walsh said.
For NAB's Clyne, who at 42 is the youngest of Australian bank CEOs, the challenge is to explain to investors why he pursued a deal that looked a tough sell to regulators.
JPMorgan and Nomura are advising NAB, while Macquarie is advising AXA Asia Pacific. Deutsche Bank is on France's AXA's side, while AMP is backed by UBS and Greenhill Caliburn.
(Additional reporting by Sonali Paul and Miranda Maxwell in Melbourne, Caroline Jacobs in Paris; Editing by Lincoln Feast and David Holmes)