The financial services market awaits the next instalment of NAB’s proposed takeover bid for AXA Australia after its most recent offer was again blocked by the Australian Competition and Consumer commission (ACCC). At the same time, AIA Australia has quashed speculation about the specialist insurer being a new target for NAB.
In a statement released late last week, the ACCC said it would maintain its objection to NAB’s takeover offer, despite the proposed undertakings submitted by the two parties.
NAB and AXA, responding to the ACCC’s initial concerns over the deal, proposed to offload AXA’s North platform to IOOF in order as to maintain competition in the retail investment platform market.
ACCC Deputy Chairman Peter Kell said “… the proposed undertakings offered by the parties do not provide sufficient certainty that the ACCC’s competition concerns will be addressed.”
Speaking on the ABC’s Inside Business program on the weekend, Mr Kell said the decision was based on “… the competition impact in the retail investment platform market.” Mr Kell indicated the arrangement was insufficient as neither AXA’s products (currently available through the North platform) nor their distribution networks were included in the deal. “We didn’t believe the undertakings were going to set up IOOF with significant competitive force to remedy the situation,” Mr Kell said. The complexity of the proposed undertakings was also a factor in the decision.
it was … not the ACCC’s role to make a competitor out of someone
When asked whether the ACCC’s verdict would have been different if the proposed offload included more than just the platform, Mr Kell responded that it was “… not the ACCC’s role to make a competitor out of someone.” Despite this the ACCC has not ruled out allowing a similar takeover bid from AMP to go through unchecked.
AMP’s initial bid for AXA’s Australian and New Zealand operations in late 2009 was rejected by AXA’s Board because the offer was not perceived to reflect the asset value or growth potential of the company. However, Mr Kell indicated that the ACCC may be willing to look more favourably on a bid from AMP as “… they don’t have the same type of platform presence that both NAB and AXA have.” While AMP has not issued a further bid, the competition watchdog’s ruling may see talks reopened.
Following the announcement by the ACCC, Steve Tucker, Group Executive of MLC and NAB Wealth said he was disappointed by the decision. In a special edition of the Aviva weekly email bulletin, Mr Tucker reassured supporters that the business was “… very well placed in the current environment to grow and capitalise on our leadership position around transparency and trust”.
A statement on the future of the bid is expected very shortly.
Following the ACCC’s most recent rejection of NAB’s takeover offer for AXA, there has been speculation in some quarters that NAB will now target AIA Australia. However, Group Executive Chairman and Chief Executive Officer Designate of AIA, Mark Tucker, denied the company was up for sale.
“I wish to make a clear statement to the Australian market and our valued partners, advisers, and customers that AIA Australia is not for sale. AIA Australia has built a solid market position, has a sound strategy and continues to make a significant contribution to the overall AIA Group,” Mr Tucker said.
