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National Australia Bank - Source: ONE News / ABC Australia -
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National Australia Bank Ltd (NAB) has won the initial support of AXA Asia Pacific Holdings Ltd (AXA APH) and issued an invitation to France's AXA SA to climb on board its own proposal to buy the funds and wealth manager for $AU13.29 billion.
Wealth management and business banking will be NAB's growth engines if chief executive Cameron Clyne completes the lender's biggest takeover since buying MLC.
NAB, already Australia's largest business bank, will become Australia's biggest superannuation provider and fund manager if its offer made on Thursday to buy AXA Asia Pacific (AXA APH) and hive off its Australian and New Zealand assets is accepted.
Clyne has the backing of the AXA APH's independent directors for his all cash or cash and script bid, and now needs French parent AXA SA to back NAB's position.
AXA SA had already mounted and improved a joint bid with AXA APH's rival wealth manager AMP Ltd, which NAB trumped.
"What we are seeing as we work to improve cross sell from the business bank is that quite a significant portion of that opportunity resides in wealth," Clyne said during a teleconference.
"Small business owners, medium business owners looking at superannuation schemes (and) their own personal financial planning.
"Building our leading position in both those franchises is a positive differentiator for NAB."
NAB's all cash offer of $AU6.43 a share values AXA APH's Australian and New Zealand assets at $AU4.61 billion and if completed, will be the bank's biggest takeover since it entered the wealth industry in April 2000 with the acquisition of MLC from Lend Lease Group for $AU4.56 billion.
Clyne said the AXA APH assets would compliment the Aviva Australia and New Zealand business NAB bought in June and the retail and broking joint venture it entered with Goldman Sachs JBWere in July.
Under a scheme of arrangement, NAB will acquire 100 per cent of AXA APH for $AU13.29 billion, merge the Australian and New Zealand businesses with its own, and divest the Asian business to AXA SA.
NAB chairman Michael Chaney said at the bank's annual general meeting, which was also on Thursday, that the acquisition was a "natural progression" for NAB, even though it wasn't particularly cheap.
"We believe the wealth management side of the business is one that has real growth potential," he said.
"For us it's not a particularly cheap acquisition."
Clyne said the bank didn't anticipate any objections from the competition watchdog or the federal government.
"A lot of the (financial) advice market ... people are free to move between advisers (and advisers are) free to recommend a range of financial products," he said.
"So we don't anticipate any issues."
But Michael Peters, a business law lecturer at the University of New South Wales, said a NAB-AXA APH merger would erode competition in the Australian financial sector.
"The big four oligopoly will be cemented further as NAB will gain access to an investor network, funds management and opportunities to raise further funds," he said.
"Inevitably this will put competitive pressure on the cost of
both investment product pricing and, more apparently, the cost of
business credit.
