AXA Asia-Pacific rejects break-up plan

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Sydney: Australian insurer AXA Asia Pacific Holdings rejected on Monday a $10.3 billion break-up plan that would have left its Australian assets with rival AMP Ltd and its Asian assets with French parent AXA.

Under the plan proposed by AMP and Paris-based AXA SA, AMP would buy all of the shares in AXA Asia Pacific, including the parent's 53 percent stake, and then sell AXA Asia Pacific's Asian assets back to the French parent for an undisclosed price.

The share and cash offer 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 last traded price.

According to a report in British newspaper the Daily Telegraph, AXA SA is readying a 2 billion euro (1.8 billion pound) rights issue that could be launched as early as later on Monday.

The deal underscores AMP's appetite to grow its wealth management business after losing out in the bidding for British insurer Aviva Plc's assets to National Australia Bank Ltd earlier this year.

The Australian wealth management sector is poised to more than double over the next decade, backed by an ageing population, the country's mandatory superannuation pension scheme and the likelihood of continued strong economic growth.

"Our view would be that it probably looks a bit light," said managing director, Ross Barker, managing director of Australian Foundation Investment Co, AXA Asia Pacific's seventh-largest fund manager shareholder.

He said the deal would give all the Asian growth prospects away to AXA SA.

"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," Barker said.

Australia's competition watchdog plans to review the AMP bid and break-up plan for AXA, the Australian Competition and Consumer Commission (ACCC) said on Monday.

"The ACCC intends to review this proposal," commission spokesman Brent Rebecca said, adding that a timeline would be set once it received written submissions.

AXA Asia Pacific has operations in Hong Kong, China, India, Thailand, Philippines, Indonesia, Singapore and Malaysia, providing about two thirds of total operating earnings.

"SIGNIFICANTLY UNDERVALUED"