The Associated Press
updated 9/19/2003 1:49:51 AM ET 2003-09-19T05:49:51

Axa, France’s largest insurer, stuck to its guns on Friday, saying it had no plans to up its $1.5 billion bid for U.S. life insurer MONY Group Inc despite shareholder threats to reject the deal as too cheap.

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AXA HAS OFFERED $31 per share for MONY to bolster its presence in the giant U.S. life insurance market.

MONY’s shares closed above that level on Thursday, suggesting a rival bidder might top AXA’s offer or AXA might have to stump up more money.

Axa said its price was fair and equitable.

“It was calculated based on a detailed analysis of MONY’s financials and there is no reason to change it. The MONY board approved it. Now it is up to shareholders to decide at a general meeting,” a spokesman said.

Highfields Capital Management, which owns about 1.9 million MONY shares, has vowed to vote against it.

Axa’s Chief Executive Henri de Castries has acknowledged the risks of a counter offer. But analysts and bankers said there were no obvious contenders among European insurers who could extract the same value from the deal.

Shareholders’ outrage at the low bid premium, currently six percent, could nevertheless tempt a rival suitor. “I’m sure there are others slide-ruling it,” said one insurance analyst. “I’m sure there are corporate bankers at this very minute carrying this company round to any number of any other insurers to look over.”


But European firms would struggle to match the synergies that Axa can achieve by putting its products and brand behind MONY’s direct sales force.

“MONY cannot easily be absorbed by anyone else...because it has an investment banking and broking business and a direct sales force,” said Andrew Crean, insurance analyst at Citigroup.

“Our own view is that on balance there won’t be another bidder,” he said.

MONY, a former mutual, has suffered along with other insurance groups from the global stock market downturn that eroded the value of the industry’s investments, which are used as capital to back their business.

“The U.S. insurance business is capital-starved in the extreme and has problems that are not easy to overcome, so everybody is very cautious,” one senior banking source said.

“It is highly unlikely there will be a strong bid over this level,” he said.

The source said no potential rival bidders had come forward during the talks between Axa and MONY that led up to Wednesday’s announcement.

Axa’s shares were unchanged at 1015 GMT at 16.95 euros. MONY shares closed at $33.10 on Thursday, up nearly four percent.

If the deal goes ahead, Axa’s U.S. arm AXA Financial would rank as the top U.S. provider of variable life insurance, based on total new premiums, and would become the fourth-largest supplier of variable annuities — or annual pensions — based on new sales, according to 2002 data.

Credit Suisse First Boston is advising MONY, while UBS is banker to Axa.

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