According to an AXA news release, MONY shareholders are slated to receive $31 for each share of MONY’s common stock – a 6.2% premium based on MONY’s September 16, 2003 closing price. AXA’s offer with a comparatively low premium reflects low valuations for insurers hit by the stock market downturn, analysts said. The transaction is expected to close in the first quarter of 2004.
The deal would rank AXA Financial, the North American arm of French insurance giant AXA, as the top US provider of variable life insurance, based on total new premiums and the number four provider of variable annuities, based on new sales, according to 2002 data, the companies said. AXA said it plans to raise $1.58 billion from investors to pay for the acquisition.
“This transaction will increase our retail insurance and annuity distribution reach by almost 25%, providing significant additional outlets for our highly competitive product line-up and a significant new presence in a number of high growth geographic markets where we are currently under-represented,” said Christopher Condron, AXA Financial’s president and chief executive, in a statement.
But not everyone was cheering the deal Thursday. With MONY shares rising, several angry investors chastised the life insurer’s management for accepting the offer with the comparatively low premium. One shareholder called the deal a “disgrace” and another said he wanted to throw management out.
Reuters reported that market analysts were even speculating another suitor could join in the bidding. In fact, Axa Chief Executive Henri de Castries admitted at a news conference in Paris on Thursday there was a risk of a counter offer. “The risk of a counter offer exists, but we have the support of the board and the management,” de Castries said, according to a Reuters report. De Castries said MONY’s shareholder base was widely spread apart from two or three institutional investors, which hold about 5%, and Goldman Sachs, which has 7%.