NU Online News Service, Oct. 13, 2003, 3:25 p.m. EDT – Cutting $125 million from annual expenses at MONY Group Inc., New York, might sharply increase the value of the company, according to Credit Suisse First Boston, New York.
AXA Financial Inc., New York, a unit of AXA S.A., Paris, announced in September that it has agreed to pay $1.5 billion, or $31 per share, for MONY.
Some large institutional shareholders complained bitterly about the price, arguing that the price reflected MONY’s soft earnings but failed to reflect the company’s high book value.
MONY has hired Credit Suisse to issue an opinion about the fairness of the AXA Financial offer. MONY summarizes the Credit Suisse analysis in a preliminary proxy filed with the U.S. Securities and Exchange Commission.
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Credit Suisse investment bankers analyzed MONY’s value by looking at what acquirers have paid for other large U.S. insurance companies since 1997.
Credit Suisse also came up with a value based on discounted cash flow from 2003 to 2007. The firm added the dividends MONY expects to pay from 2003 to 2007 to a “terminal value” for 2007.
Valuing MONY using price-to-earnings ratios paid in comparable deals gives a range of only $18.95 to $21.32 per share, and using the price-to-book ratios gives a range of $27.11 to $33.13 per share, according to the MONY summary of the Credit Suisse analysis.