France's AXA SA accepted the plan from NAB, moving closer to ending a four-month takeover tussle.
With AXA SA finally on NAB's side, all eyes will now be on whether the Australian Competition and Consumer Commission (ACCC) approves Australia's second-largest financial services deal, almost two months after the French insurer's deal with rival bidder AMP expired.
A deal would cement NAB's leadership in the $A1.09 trillion Australian wealth market - the fourth-largest globally - and could boost NAB's shares on Wednesday, analysts said.
Craigs Investment Partners broker Chris Timms said the acceptance of the NAB bid left the future uncertain for AMP.
There would be ongoing consolidation in the Australian and New Zealand funds management industry and AMP could find itself a takeover target as banks looked to extend their exposure in funds management.
Without AXA AP to add to the "bulk" of AMP, it would not be surprising to find another party starting to look at AMP as a possible target, he said.
AMP shares were down 1% yesterday after the NAB deal was announced to the ASX.
NAB said it would look at the appetite for its shares from AXA AP's minority shareholders before deciding on a share sale, watering down a December announcement of $A1.5 billion share sale plan.
Mr Timms believed that most AXA shareholders who had inherited their shares in the demutualisation process would be keen to sell at the offer price of $A6.43.
Investors who had bought AXA shares might not want to hold NAB shares, as it was a different entity.
They too would look to sell.
The uncertainty surrounding the ACCC decision could also play on the minds of investors, some of whom appeared to be bailing out yesterday, he said.
NAB shares have fallen 1% since it made a bid for AXA AP in mid-December, compared with a 10% to 18% rise for rivals.
NAB has a tier I capital ratio of 9.3%, the second-highest among Australia's Big Four banks.
While NAB hoped to close the deal by mid-2010, it hinged on the ACCC, which has voiced more concern about NAB's offer than AMP's smaller bid.
The regulator said it would rule on NAB's bid on April 22.
But it had already deferred its decisions several times - the latest earlier on Tuesday - on AMP's offer, prompting concerns of more delays.
The ACCC was concerned a combined NAB-AXA would dominate the retail investment platforms, given NAB's retail banking power.
An NAB-AXA combine would have a 21% market share in the retail funds market and a 15% share in the wholesale funds market, almost twice the size of the nearest competitor.
Shares of AXA AP and NAB were on a trading halt pending the announcement.
Under the deal, NAB, Australia's biggest lender, would pay $A4.6 billion for the Australian and New Zealand business of AXA AP, and AXA SA would pay $A9.4 billion for the Asian businesses.
The deal, which had the support of AXA AP's independent directors, was unchanged from the original plan unveiled on December 17.
AXA AP would use $A700 million from the proceeds to repay debt to the French company.
The agreement will run until July 31 and is extendable until the end of October, if some regulatory approvals are not received, it said.
"It is an attractive, strategically aligned opportunity that enhances NAB's activities in the growing wealth management industry," NAB chief executive Cameron Clyne said in a statement.
