United Kingdom: Axa, AMP $10 Billion Bid May Signal Resurgence in Insurer M&A.

Byline: kusumv03

Axa SA s decision to team with AMP Ltd. in a $10 billion bid to buy out its Asian unit may signal a pick-up in mergers among insurers as economies improve and bailed-out financial institutions prepare to sell assets.

Axa is seeking to win support from independent board members at its Melbourne-based unit, Axa Asia Pacific Holdings Ltd., after an unsolicited bid the French insurer made with wealth manager AMP was rejected, Axa Chief Executive Officer Henri de Castries said yesterday.

Paris-based Axa will raise 2 billion euros ($3 billion) in a rights offer designed to fund the Axa Asia Pacific bid and other potential takeovers, the company said. The insurer plans to spend a few hundred million euros buying the rest of units it controls in Poland, the Czech Republic and Hungary, Chief Financial Officer Denis Duverne said on a conference call.

It s a good time to set off again on the offensive, de Castries said on the call yesterday, speaking of acquisitions. There will be a certain number of opportunities. Assicurazioni Generali SpA, Europe s third-biggest insurer, may take advantage of insurance assets expected to come up for sale if prices fall.

Prices are too high to be considered for a financially sustainable acquisition, co-Chief Executive Officer Giovanni Perissinotto said yesterday. But sooner rather than later we think insurance assets are likely to come to the market, and only at that time we will be open to opportunities.

ING, Royal Bank

ING Groep NV, the largest Dutch financial-services company, plans to split off its insurance assets following a government rescue, the Amsterdam-based company said last month. Royal Bank of Scotland Group Plc is also selling insurance units after a U.K. government bailout.

It s too soon to say whether Axa would be interested in any of ING s businesses, de Castries said, adding that the company has no interest in the U.K. insurance operations of Edinburgh-based Royal Bank.

De Castries, 55, said the Axa Asia Pacific offer is reasonable and that he is ready to discuss it with the unit s independent directors. Axa and Sydney-based AMP must win approval from the independent directors and minority shareholders to carry out the purchase, the company said.

AMP bid A$5.34 in cash and stock for each share of Axa Asia Pacific, 24 percent higher than the closing price on Nov. 6. Under the proposal, Axa would sell its 54 percent stake in Axa Asia Pacific to AMP, and buy back the units outside Australia and New Zealand for A$7.7 billion ($7.1 billion).

Pole Position 

The deal would cost Axa about 1.1 billion euros, leaving about 900 million euros of the proceeds from the rights offer for potential purchases, Duverne said.

This move is key to keep the pole position that Axa tries to achieve in Europe and to bolster its position in Asia, said Lutz Roehmeyer, who helps manage $17 billion at Landesbank Berlin AG. We will see more M&A activity. Capital markets recovere

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