Daily ShareChat: AMP

By Jenny Ruth

Monday 16th November 2009

AMP and AXA SA's opportunistic joint takeover offer for AXA Asia Pacific would substantially strengthen AMP's position across its core markets of wealth management and wealth protection, says Aegis Equities analyst David Ellis.

If the offer which values AXA AP at $A11 billion ($NZ13.8 billion) succeeds, AMP would take the Australian and New Zealand businesses while AXA SA would take the Asian business.

"The proposal would result in AMP becoming Australia's leading provider of risk insurance, superannuation and retirement income," Ellis says.

The takeover announcement is not surprising given the attractiveness of AXA's Asian, Australian and New Zealand assets, he says.

While AXA AP's board has rejected the proposal, saying it undervalues the business, "a higher bid remains a strong possibility."

Despite the rejection, AXA AP's board "noted it remains receptive to appropriately priced offers and obviously the group is now in play."

AXA AP's long-term outlook is positive and earnings from its wealth businesses are expected to improve, Ellis says.

"Despite the challenging operating conditions in the first-half of 2009, AXA's underlying businesses are coping well and the group is well-capitalised and strategically positioned to leverage the market recovery."

Ellis also has a positive view of both AMP's and the wealth management industry's longer-term outlook.

BROKER CALL: Aegis Equities rate AMP as buy; neutral on AXA AP following the bid-induced jump in the share price.

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