SYDNEY National Australia Bank (NAB) (NAB.AX) withdrew its $12 billion bid for wealth manager AXA Asia Pacific AXA.AX on Tuesday after a second rejection by regulators, opening a door to a bid by rival fund AMP (AMP.AX).
Australia's competition regulator last week again blocked NAB's bid for AXA Asia Pacific, dashing the bank's efforts to cement its lead in the world's fourth-largest wealth management market.
NAB's withdrawal, which had been expected, shifts the spotlight to rival bidder AMP, another Australian wealth manager.
"There is no point for NAB to be wasting time on this deal any more. I would expect AMP to come back probably by starting talks with the French parent of AXA Asia," said RBS banking analyst John Buonaccorsi.
AXA Asia Pacific is controlled by French insurer AXA SA (AXAF.PA).
AXA, which has been trying for months to orchestrate a deal to split off its Australian and New Zealand operations to grow in Asia, noted NAB's decision and said in a statement it would continue to review its options according to its growth strategy.
AMP said the group was still interested in buying the Australian and New Zealand assets of AXA Asia Pacific. "AXA Asia Pacific remains strategically attractive at the right terms," a spokeswoman from AMP said.
The top two wealth managers in Australia, NAB and AMP, have been vying for the sixth-largest fund manager in what is considered the last major consolidation opportunity in the country's fast-growing $1.2 trillion wealth management sector.
Analysts expect AMP to come back with a bid higher than its previous offer but well short of NAB's pitch of A$6.43 in cash for each AXA Asia Pacific share.
Analysts say AMP could increase the share portion to 0.81 of a share for each AXA Asia Pacific share from 0.69 and still see an earnings boost in the first year.
They say AXA Asia Pacific's independent directors may not have a credible reason to reject a lower bid from AMP with NAB out of the picture.
The competition regulator opposed NAB on the grounds it would weaken competition in retail investment platforms -- an internet portal that binds wealth manager , products and clients.
As a result none of the other big banks, except Australia and New Zealand Banking Group (ANZ.AX), could make a play for AXA Asia. ANZ has said its interest lies in expanding in Asia.
In a statement, NAB said wealth management remained an important part of the bank's future but that the agreed takeover deal with AXA Asia Pacific was over.
"Considering all the options, continuing with this agreement is not in the best interests of shareholders," NAB Chief Executive Cameron Clyne said.
NAB, AXA Asia Pacific and AXA SA had an exclusive agreement for the deal that expired last Thursday.
(Reporting by Ed Davies and Narayanan Somasundaram; Editing by Anshuman Daga and David Holmes)