The game’s not over for AMP

While NAB’s offer for AXA Asia Pacific’s Australian and New Zealand businesses seem to have upped AMP’s bid by 4 per cent, the game may not be over yet for AMP.

“There is still some confusion in the market, but AMP’s view is that it is now free to make a higher offer (if it deems that appropriate),” Goldman Sachs JB Were commented in its investment research update. “This is despite AMP having declared its revised offer ‘final’. AMP has also indicated that, in light of the exclusivity agreement, there is no hurry for it to make its next move — it effectively has until February 6.”

Goldman Sachs JB Were’s view is that the AXA deal would significantly improve AMP’s competitive positioning and its resilience to the regulatory reviews that are currently underway, adding: “Therefore, we would endorse AMP paying a higher price, rather than letting the deal fall over.”

However, Goldman Sachs JB Were believes NAB has deeper pockets and that this offer is probably not its best. They are not convinced that AMP can win if it decides to enter a bidding war.

Citigroup said that they would be surprised if AMP came back with a revised bid, adding: “NAB’s counter bid has the attraction of offering 4 per cent more and the certainty of cash as an option. It is the cash component that AMP is likely to find hard to match, particularly in the light of the uncertainty provided by the Cooper review.”

Credit Suisse also said that a revised AMP bid would be unlikely, although they highlighted competition issues concerning NAB, noting that NAB/AXA would control 40 per cent of the disability market — as opposed to AMP/AXA with 28 per cent.

“Although a forced divestment is not necessarily a deal breaker,” Credit Suisse stated.

In response to a question posed about any regulatory concerns and whether they foresee any difficulties during a teleconference later that afternoon, NAB CEO Cameron Clyne said they will have to go through the formal process.

“Following our initial assessment we don’t see any issues, but we will obviously go through a formal submission to address any regulatory issues as part of the process,” he said.

NAB has requested that the ASX lift the trading halt with respect to its ordinary shares, and stated that it is in compliance with continuous disclosure obligations and that it will continue to inform the market in accordance with ASX listing rules.

However, there were concerns that NAB announced the proposal during a media teleconference yesterday, about half an hour before anything appeared on the ASX or any official notification was given to shareholders.

Clyne refused to answer questions about when the acquisition came onto NAB’s radar, as the announcement seemed to come at the final hour, pushing aside AMP’s bid.

“I’m not going to engage in any speculation about the process,” said Clyne. “Obviously what we are doing all the time is looking at market opportunities that might be there.”