NAB sorts out terms for Axa bid

It may all be academic - given the doubts raised to date by the ACCC on the proposed merger - but National Australia Bank and Axa SA have worked out the agreement for the latter to buy from the former the Asian business of Axa Asia Pacific, assuming that NAB gets to buy Axa AP in the first place.

The value in the agreement is much the same as Axa SA agreed in December to pay AMP were AMP in the box seat to buy Axa AP, which it is not, but might yet be if the ACCC sword falls on the NAB offer in late April, when the decision is due.

Under the agreement Axa SA will buy the Asian businesses of Axa Asia Pacific from NAB for $9.7 billion. NAB will then repay $700 million in AXA AP debt owed to Axa SA.

AXA SA will, however, provide a loan of $600 million to NAB through its National Wealth Management subsidiary.

NAB will still, as foreshadowed in December 2009, effectively pay $4.6 billion for the Australian and New Zealand business of AXA AP.

The agreement makes clear that NAB will improve the share component of the cash and share offer if NAB sells additional equity to fund the cash component of the bid.

A break fee of $45 million is payable by Axa AP to NAB if a better offer emerges (from AMP, or maybe even a late offer from ANZ). Axa AP is subject to no shop and no talk provisions.

The agreement is valid to 31 July 2010 and may be extended by three months if needed to meet regulatory processes in Asian markets.

The ACCC was going to provide its view on the AMP offer for Axa this week, but that's now due for release on April 22 along with the regulator's final view on the NAB bid.