Paris, Aug 31: AXA Group announced plans to sell one big US holding and is trying to acquire another. As part of a major restructuring of its US presence, AXA said it would make a $10.4 billion offer to acquire the remaining stake in AXA Financial, the former insurer Equitable Cos. that AXA gained control of in the early 1990s. The move came as AXA confirmed plans to shed the US investment bank, Donaldson, Lufkin & Jenrette Inc. to Credit Suisse Group.For the roughly 40 per cent of the AXA Financial shares that trade publicly and aren't owned by AXA Group, AXA Group is offering $53.50 a share in cash and stock, a price that some on Wall Street believe is a low-ball offer.
The unusual twin multi-billion-dollar deals are characteristic of the opportunism that has transformed AXA Group from a provincial French insurer to a global insurance giant in the space of three decades. Though it has long said that DLJ - which had been owned by Equitable - wasn't strategic, AXA waited until the right offer came along to sell it. And AXA is immediately reinvesting the proceeds and more into reinforcing its positions in a key market as part of its strategy of concentrating all its resources on its core business of "financial protection."
AXA Financial's chief executive Edward Miller said "We believe this transaction provides us with additional capability to invest in our core businesses of distribution, asset gathering and asset management, a strategy which has produced significant success."
Another AXA Financial unit, money manager Alliance Capital Management, announced plans in June to acquire Sanford C Bernstein & Co., a respected money-management firm, for roughly $3.5 billion. AXA Group chief executive Henri De Castries said at a press conference in Paris, "DLJ needed to devote large resources to maintain its competitive advantage and accelerate its expansion in Europe and Asia. AXA did not want to devote an increasing amount of resources to build up investment banking activities." The two moves call for some fancy financial footwork, however. Under the first part of the transaction, Credit Suisse is shelling out $11.5 billion to buy DLJ, of which AXA Group is set to receive $8.1 billion for its 71% stake. AXA will get $2.4 billion in cash and the remaining $5.7 billion in Credit Suisse shares, which will give it an 8.1 per cent stake in the Swiss bank, on top of the 2 per cent Credit Suisse says AXA already owns through its asset-management units.
-- (The Wall Street Journal)
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