The French parent of Axa Asia Pacific Holdings, Axa SA, has made a $3.1 billion bid for the minority shareholding in the company to improve its capital structure and bolster its exposure to the Asian market.

The conditional offer of $3.75 a share for the remaining 48.3% of Axa’s Australian operations has prompted market scepticism that the parent has undervalued the company, and hasn’t taken recent profit into account.

Axa Asia Pacific wants to make sure the move is the right one too. It has formed a committee to consider whether to recommend acceptance of the offer, which has to be approved by the Foreign Investment Review Board (FIRB).

However, the upcoming federal election may weigh down Axa’s campaign. A federal Treasury representative has been reported as saying that once the election was called, the FIRB would have to respect caretaker conventions and the matter would be postponed until after the election.  

Earlier this year Axa Asia Pacific renewed the contract of CEO Les Owen for another three years, saying it was pleased with the direction he had given the company. Mr Owen didn’t divulge much about the parent’s takeover plans when he announced the June-half results last week, but he did hint at further growth opportunities in the Asian market.

“We are starting to gain traction in growing shareholder value in our other businesses in South East Asia,” he said. “We have a strong financial services platform in Asia and are confident about growth opportunities.”

Axa SA concedes that any buyout would need to be in line with its 1995 commitment to use the Australian company as a springboard into Asia and maintain a board with Australian directors. It’s that commitment which is causing some scepticism over the deal.

Axa SA CEO Henri de Castries says he wants to reach an agreement on the buyout by mid-September. “This transaction would allow Axa to further increase its exposure to the Asia Pacific region, to further enhance its earnings diversification and to be in a better position to seize external growth opportunities as they arise,” he said in a statement.

“We believe that Axa Asia Pacific Holdings has developed in this region a successful mode of wealth management, completely in line with Axa’s positioning in financial protections, which provides us with a good platform for future developments.”