2nd UPDATE: AXA SA Plans To Raise EUR2 Billion For Acquisitions

French insurer AXA SA (AXA) said Monday it plans to launch a EUR2 billion rights issue to swell its war chest for potential acquisitions, including the possible purchase of AXA Asia Pacific Holdings Ltd.'s (AXA.AU) Asian assets.

AXA APH earlier Monday rejected an A$11 billion cash and equity takeover proposal from Australian wealth manager AMP Ltd. (AMP.AU), which had planned to sell the company's Asian businesses to AXA SA.

Under the terms of the complex proposal, AMP aimed to buy all of AXA APH, including the 53.9% held by France's AXA SA. AMP would then merge AXA APH's New Zealand and Australian wealth management and protection businesses with its own and sell AXA APH's Asian operations to AXA.

The proposal is the parent company AXA's second attempt to snap up AXA APH's Asian assets. It failed with a lowball A$6.9 billion buyout of AXA APH in 2004.

AXA, Europe's second-largest insurer by market value, said it aims to use the rights issue to pursue acquisitions, mainly in high-growth markets, an approach that tallies with the group's previously stated acquisitions strategy.

"Through the rights issue, our shareholders will be able to participate in the positive prospects offered by the acquisition opportunities arising from the current market environment," Chief Executive Henri de Castries said in a statement.

The fresh capital could be put to use in relation to "the AXA Asia Pacific proposal," AXA SA Japan and Asia Pacific Chief Executive John Dacey told reporters.

Another area where AXA said it may seek to employ the extra funds is in the buyout of minority interests in Central and Eastern Europe.

The new AXA shares arising from the capital increase are expected to list on Dec. 4, the company said.

Shareholders will be entitled to one preferential subscription right for each existing share held at the end of trading on Nov. 9. Twelve preferential subscription rights will be required to subscribe for one new share at a subscription price of EUR11.90, AXA said.

After taking into account the dilution once the new shares start trading, the price represents a discount of 27.9% to the EUR16.88 AXA shares closed at Friday, according to the group.

At 0829 GMT, AXA shares were down 0.5%, or EUR0.08, at EUR16.80, underperforming France's benchmark CAC-40 index.

AXA's mutual shareholders AXA Assurances IARD Mutuelle and AXA Assurances Vie Mutuelle, which together own 14.29% of the company's capital, have agreed to follow the rights issue, exercising all of their preferential subscription rights, AXA said.

French bank BNP Paribas SA (BNP.FR), which holds 5.36% of AXA shares, and French electrical equipment maker Schneider Electric SA (SU.FR), which owns 0.47%, have also "indicated their intention to subscribe to the capital increase," AXA said.

A syndicate of banks has underwritten the remainder of the share issue, the company said.

-By Jethro Mullen and Rebecca Thurlow, Dow Jones Newswires; 33 1 4017 1738; jethro.mullen@dowjones.com

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