How do you make a gooseberry crumble? Axa, the world’s fourth-largest insurer, seemed to strike a great deal in 1995 when it sank just over a billion dollars into National Mutual, Australia’s second-largest life assurer, in exchange for a 51 per cent interest. But in taking control, Axa undertook to give the unit first right of refusal over any expansion that the group wanted to make in Asia. That was limiting enough, as growth in the east began to outstrip the west. It also meant that there were three parties in the room whenever Axa bid for groups with Asian assets.

Five years ago Axa chief executive Henri de Castries failed in a bid to buy out minorities in the unit, renamed Axa Asia Pacific Holdings (APH) in 1999, three years after listing in Australia. Now he’s back, and mob-handed. Under a A$11.5bn cash-and-share proposal, Sydney-based wealth manager AMP will buy APH, including Axa’s now 54 per cent stake. AMP will then sell back the Asian operations to Axa for about 70 per cent of what it paid for the whole lot, keeping the Australian business for itself.

The tortuous offer, worth about A$5.59 a share at Monday’s close – and immediately rejected – seems opportunistically timed. APH, where over half of operating earnings are in Hong Kong dollars, has lagged Aussie-dollar earners on the ASX for months. But the price is not yet a knockout. An implied 1.2 times embedded value for the Australian business is in line with recent acquisitions. But on Daiwa SMBC estimates, Axa would be paying about 1.6 times 2008 embedded value for the faster-growing Asian business. Something closer to two times, equivalent to about A$6.15 a share, might clinch it. Determination to shake off an unwanted chaperone should ensure Mr de Castries digs a little deeper.

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