National Mutual And Lend Lease Not To Proceed With Proposed Merger

National Mutual Holdings and Lend Lease Corporation (LLC) have decided not to proceed with the proposed merger of their respective funds management and life insurance businesses in Australia and New Zealand.

After protracted discussions and negotiations, LLC cited two significant issues that remained unresolved. They related to the conditions that would apply should it become appropriate in a number of years time for the merger to be dissolved and the relationship between management of the merged entity and the shareholding companies. The parent companies were both concerned to ensure that the interests of their respective shareholders were appropriately protected and addressed in the longer term, as well as over the next few years.

At a time when the largest financial services group in Australia and New Zealand, the Australian Mutual Provident Company, is planning on going public, the merger of National Mutual and LLC would have created the second largest financial services entity in Australia and New Zealand, A.M. Best reported. With assets of at least $133.5 million, the National Mutual/MLC, as the new company would have been called, would have provided a strong challenge to Australian Provident.

Geoff Tomlinson, Group managing director, National Mutual, said that while it is disappointing that the proposed merger is not to proceed, National Mutual would continue to drive forward to achieve its vision of becoming the leading financial services group in the Asia Pacific region from its home base of Australia and New Zealand.

"National Mutual is well positioned from its strong presence in 11 markets around the region to build on its experience through consolidation in familiar markets and entry into new areas," Tomlinson said. "At the same time we will carefully examine strategic opportunities in Australia and New Zealand; opportunities which will enhance our future positioning in the financial services market and, at the same time, add to shareholder value."

National Mutual, listed on the Australian and New Zealand Stock Exchanges, is 51 % controlled by AXA, the French insurer. The news of the halted merger plans sent shares in National Mutual falling 7% to A$3.60 (US$1= A$1.579). Lend Lease shares decreased 4% to $35.35. Playing down the halted plans, an AXA spokesman revealed that the area only contributed 6% to AXA's global revenue and would have contributed only $25 million to net income.

AXA acknowledged that although satisfactory arrangements covering most potential issues had been agreed, some remained unresolved, including exit issues. The AXA Group stressed that National Mutual will continue to focus on the development of its existing businesses in the Asia Pacific region and look for opportunities with other companies.

"Financial services is now a global industry and we see ourselves firmly as a regional player, complementing the global expertise of the AXA Group," Tomlinson commented. "The merger preparation work has supplemented the extensive work already undertaken to create an even more efficient organization which delivers world class financial services to our extensive client base," he concluded.