AXA Asia Pacific share values are tipped to fall now the Australian Competition and Consumer Commission has decided to oppose National Australia Bank's takeover plans for AXA AP.
The commission's blockage of the bid paves the way for a rival $A13.2 billion ($NZ17.5 billion) offer from AMP Ltd to proceed.
Craigs Investment Partners broker Chris Timms said yesterday the commission's focus on the likely deterioration in the retail investment sector left little room for NAB to negotiate.
AMP was the winner but it was once again contemplating capital raising which could put pressure on its share price.
"AXA could also fall as competitive tension eases."
In early trade yesterday, AXA shares were up 1.63%, AMP shares were up 1.75% and NAB shares were down 1%.
Craigs viewed the commission's actions as "fairly unprecedented", effectively blocking the transaction partially on the basis of a potential decrease in future competition rather than a straight-forward examination of the status quo.
While NAB was likely to hold further discussions with the commission, it seemed a decision which would be hard for NAB to argue against.
Craigs outlined three options for NAB:It could continue with its bid and challenge commission decisions.
It could focus on expanding in the UK retail banking market, buying UK assets at close to book value while the currency was at a 25-year low.
With no AXA or UK acquisition, NAB could do a buy-back of up to $A3 billion.
AMP welcomed the decision and said it would be a great outcome for Australian consumers.
However, the AXA independent directors were more cautious in their response, noting that AXA directors and management continued to be committed to current strategies to maximise shareholder value.
Mr Timms said AMP believed it could continue to put forward a financially disciplined proposal that created value for shareholders and which independent AXA shareholders would recommend.
"We believe AMP will have to have an all-cash option in its bid to satisfy AXA independent directors."
Craigs estimated a capital raising of about $A1.1 billion from AMP to fund the cash offer, which could put pressure on its share price in the near term.
Other opposing forces included the benefit of not being forced to overbid for the asset countered by the potential for hedge funds to short-price AMP as a quick method of neutralising their long positions in AXA.
AXA AP said it had delivered a strong performance in its first quarter, with sales in Asia particularly strong.
AXA AP management's focus on business as usual had delivered a strong performance in the first quarter, its chief executive, Andrew Penn, said in a statement.
"Sales growth in Asia was particularly strong with total new business index of $A289 million up 57% on the first quarter of 2009 on a constant currency basis."
In Australia and New Zealand, AXA AP posted continued strong growth in financial protection, although customer confidence was yet to fully return in wealth management.
"AXA wealth management inflows in Australia were up 2% in the quarter to $A1.5 billion including $A124 million in North sales," Mr Penn said.
"Total Australian individual financial protection new business was up 12% to $A23 million."
