AMP Spins The Same Line On AXA Bid

  AMP Ltd CEO, Craig Dunn, said yesterday that if a merger with Axa Asia Pacific Holdings Ltd's Australia and New Zealand units went ahead, it would allow the company to improve its scale and cost efficiencies.Mr Dunn & #160;used a long arranged luncheon speech in Melbourne yesterday & #160;to again argue in favour of the bid.He & #160;used the opportunity to put the case in favour of the Axa takeover, with Axa's French parent financing much of the bid in exchange for the Asian businesses that it has long wanted.He again pitched the AMP's rationale for the bid to be a counterweight to the size and scale of the Big Four banks.It's the old '5th pillar' argument of 'allow us to become strong because they (the Big Four banks) are already strong'.He also said the AMP would boost its banking business.That's another long heard promise from the group. It has been hot and cold on banking.And for much of the past decade has been cold, when it should have really been developing an on line presence much in the way & #160;that ING Direct has.But Mr. Dunn wants Axa, so he's ready to sing the most appropriate song when all it would take would be another 60 cents or so an Axa share to get the deal over the line.The cash and share proposal put to AXA APH's board earlier this month values it at & #36;5.34 each, well under yesterday's close of & #36;5.84. & quot;Frankly, these all add up to a very compelling offer, & quot; Mr Dunn told the Trans-Tasman Business Circle in Melbourne yesterday. & quot;But let me be very clear on one point. & quot;While the proposed merger with AXA is a transaction that we surely want to do, it's not a transaction that we absolutely have to do. & quot;We have very significant opportunities for growth in our own right in both Australia and in Asia. & quot;That's basically a message to the Axa Asia board, 'talk to us or we will walk'He said there & #160;were many benefits in merging the Australian and New Zealand operations of these two great companies. & quot;These were, he said: & #160;Australians need and deserve the strongest possible non-bank competitor in the important wealth management sector; & #160;second, by combining AMP and AXA, we can build a new financial force that will deliver superior benefits to the customers and shareholders of both companies and thirdly & #160;a combined AMP and AXA will bring more affordable financial advice to many more Australians. & #160; & quot;That's important for their future financial security and prosperity, and that of the nation. & quot;Ten years ago, only two commercial banks were among the top 10 fund managers in this country. Back then, Commonwealth Bank was ranked fifth and Westpac ninth. & quot;Since then many of the large, independent fund managers have been absorbed by the big four banks in what has been an ongoing wave of consolidation in the Australian financial services sector. & quot;Today, largely through acquisition, our big four banks control almost half the wealth management market between them. & quot;I greatly respect our major banks and the responsible way they've managed their institutions. Unlike most other western countries our banks have stood us in very good stead during the global meltdown of the past 18 months. & quot;But I also have no doubt that Australians can only benefit from having an even stronger, home grown non-bank competitor in this market. One that has a long and proud history, with one of the most recognisable brands in the country. & quot;If successful, our merger with AXA's Australian and New Zealand operations would provide a new way forward - the building of a fifth pillar in the financial services sector in Australia. And I mean a fifth pillar, not in policy terms, but in competitive terms. & quot;A successful merger between AMP and AXA would deliver even greater choice and improved access to advice for millions of Australians and New Zealanders. & quot;AMP has delivered this for 160 years. AXA, as the former National Mutual, for 140 years. & quot;Indeed, I like to think of this proposal as a great Australian company buying back the farm to create a combined company that is stronger and more competitive than either company is today. & quot;Together, we would improve the competitive landscape by offering consumers an even more competitive alternative. What we're talking about here is maintaining competitive tension in a market that is critically important to all our futures. & quot;What this merger will do, if it goes ahead, is allow us to improve our scale, & #160;further improve our cost efficiencies and therefore enhance our capacity to compete. & quot;AMP also has its own retail banking licence which we'd like to develop and grow more strongly over time. & quot;This merger will enable the combined company to offer those competitive banking services to more Australians, and it will increase the financial resources we have to back our bank's continued growth. & quot;The new, combined company would hold leading positions in financial advice, superannuation, risk insurance, retirement incomes and asset management. & quot;We would take the best products and platforms from both companies & #160;and ensure they're offered to more Australians. & quot;With our combined strength and greater financial resources, we would invest more in developing new products and services for customers and planners. & quot;Bringing the two companies together would also create substantial cost synergies. This was recognised by AXA's parent company when it chose AMP as its partner on this proposal. & quot;And more than one million Australian and New Zealand shareholders would be owners of this merged company. & quot;We've carefully structured our proposal for AXA minority shareholders to ensure that not only would they receive a substantial premium on their current shareholding, but they would also share in the future benefits that this new financial force would generate. & quot;Importantly, AXA shareholders would hold nearly a quarter of the shares in what would be the leading wealth management company in Australia, & quot; Mr Dunn said.Of course, these are just words. All it would take for these fine sounding sentiments to become a reality is & #160;more money on the table, with most & #160;analysts & #160;saying a value of around & #36;5.80 per Axa Asia Pacific share would win a 'yes' from the Axa board.And what did the market think of this?Axa shares eased 15 cents or more than 2% to & #36;5.84. AMP shares fell 11c to & #36;6.30.More money will be needed on the table to get the bid over the line.The overall market was off half a per cent. & #160;  

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