AMP, AXA APH shares up on takeover talks

AMP Ltd shares jumped over four per cent on Tuesday on expectations the wealth
manager and insurer itself could be the subject of a takeover.
The development comes just days after the Australian group and Paris-based AXA SA
made an $11 billion tilt for AXA Asia Pacific Holdings Ltd (AXA APH).
Brokers suggest Australia's big four banks may swoop on AMP.
The market on Tuesday awaited for a sweetened acquisition proposal for AXA APH from
AMP and AXA SA, Europe's second biggest insurer.
The target on Monday rejected the proposal claiming the cash and share bid
"significantly undervalues" the group.
The proposed price of $5.34 a share is now well below AXA APH's closing price on
Tuesday of $5.77, a gain of seven cents or 1.23 per cent on the day and follows a
leap of 32.5 per cent the day before.
AMP's shares finished 27 cents, or 4.41 per cent higher at $6.39 on Tuesday on the
speculation of a possible bid, IG Markets' analyst Ben Potter said.
Potential synergistic benefits from the AXA APH acquisition proposal of $120 million
a year after tax were being assessed by others, which also buoyed trading in AMP and
AXA APH, CMC Markets equities dealer David Barrett-Lennard said.
"The analysts have been crunching the numbers over the last day or two and
everyone's certainly giving it the thumbs up in regards to resulting synergies," he
said.
"Certainly that's the reason behind AMP's outperformance today."
"AXA's certainly benefiting from potential counter-bids," Mr Barrett-Lennard said
However, Commonwealth Bank chief executive Ralph Norris on Monday flatly denied the
bank would make a tilt for AXA APH.
"We're happy with where we are in the wealth management space," he said.
A sweetened bid for AXA APH from its parent, Paris-based AXA SA and partner AMP, is
more likely, brokers Merrill Lynch and Citigroup said.
AXA SA owns 53.93 per cent of AXA APH and together with AMP put a cash and share
proposal to AXA APH's board last Saturday that valued the target at $5.34 each.
The unsolicited and conditional scheme proposal has been rejected by AXA APH's board
although chairman Rick Allert indicated the board would consider a better offer.
AXA APH chief executive Andrew Penn said on Monday the consensus appraisal value for
the company ranges from $4.80 to $5.76 per share.
If successful, the acquisition would see AXA APH's minority shareholders get 0.6896
AMP shares plus $1.3796 in cash for every AXA APH share they own.
Merrill Lynch said that while the bid looked like a full offer, a higher bid was
needed to secure the support of AXA APH's minority shareholders although this would
probably not exceed $6.00 a share.
"We cannot envisage an offer for AXA APH above $6.00 a share flying with either AMP
or AXA SA shareholders," the broker said.
Citigroup said a superior offer was likely if it was to win over AXA APH's
independent directors who resisted AXA SA's first attempt to buy out minority
shareholders in 2004.
"This time, however, they have their parent company and major competitor working in
cohorts to try and get them to sell," Citigroup said.
AMP now has an interest in AXA APH after AMP became an associate of AXA SA.
On Tuesday, AMP lodged a consortium agreement with AXA SA at the Australian
Securities Exchange setting out the details of an exclusivity agreement over the
transferral to AXA SA of AXA APH's much coveted Asia assets.
Under the agreement both parties have formed a consortium on an exclusive basis to
progress the proposal whereby AXA SA has agreed not to talk to other parties in
relation to acquiring the Asian assets.
AMP now has an interest in AXA SA's 53.9 per cent ownership stake in AXA APH.