AMP and Axa Asia Pacific Holdings (Axa APH) have signed a binding transaction agreement as part of the deal to merge the two companies.

The documents set out the key commercial terms to allow the merger, and provide two weeks of reciprocal due diligence before the legally binding offer is made.

The agreement will allow either party to walk away from the deal if court approval is not given or Axa APH Chairman Rick Allert and the majority of the independent board members don’t recommend the deal.

Both sides are now locked into the deal and cannot negotiate with a third party, the agreement says.

In addition to receiving shareholder and court approvals, the merger also remains subject to further regulatory approvals including that of Federal Treasurer Wayne Swan.

It is expected that the transaction will be put to the Axa minority shareholders for approval by the end of the first quarter of next year.