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A federal judge and a proxy advisory service have sided with money managers who are fighting efforts by a unit of AXA S.A. to acquire The MONY Group Inc.

AXA Financial, New York, agreed in September 2003 to pay $1.5 billion, or $31 per share, for MONY, New York. MONY shareholders can vote on the offer by mail or at a special shareholder meeting scheduled for Feb. 24.

Highfields Capital Management L.P., Boston, a hedge fund, has been trying to mail MONY shareholders a copy of the deal proxy, to help shareholders vote against the deal.

MONY tried to block the proxy mailing, but U.S. District Judge Richard Holwell, a judge in the U.S. District Court in New York, ruled that Highfields can send MONY shareholders the proxy cards.

In related news, Institutional Shareholder Services Inc., Rockville, Md., a firm that helps more than 700 money managers decide how to vote their proxies, has recommended that its clients vote against the AXA offer.

Institutional Shareholder analysts agree with Highfields executives and their allies that the price AXA has offered for MONY is too low.

When compared with MONYs book value and price-to-book value ratios for other insurance deals, the offer price “is outside the boundary of reasonableness,” Institutional Shareholder analysts write in a comment on the proposed deal.

The Institutional Shareholder analysts also agree with deal opponents that acquisition agreement terms calling for MONY managers to receive $90 million in payments from AXA create the impression that the interests of MONY managers differ from those of MONY shareholders.

“A vote against the merger entails price risk over the short term,” the Institutional Shareholder analysts concede.

But the analysts say improving insurance market conditions should help MONYs managers and MONYs board unlock more shareholder value.

Richard Grubman, managing director of Highfields, welcomed the court ruling and the Institutional Shareholder report.

MONY “has already spent millions of dollars in an attempt to nullify and, through litigation, even stifle the voice of its own shareholders,” Grubman says. “We are hopeful that the board will resist further attempts to impede shareholder rights and will take action to preserve MONYs resources.”

But MONY Chairman Michael Roth says Highfields, the Institutional Shareholder analysts and other deal critics are clearly wrong.

“The fact that no other party has come forward since the September announcement of the proposed merger with an offer greater than $31 reinforces our view,” Roth says.

So far, none of the deal critics has presented any other concrete plans to improve MONYs shareholder value, Roth says.

MONY managers have emphasized that MONY will have a tough time improving its value to suitors other than AXA any time soon, given the difficulties MONY faces as a midsize company struggling to compete with corporate giants.

MONY also emphasizes that clients of Institutional Shareholder are free to make their own voting decisions. MONY predicts that most of Institutional Shareholders clients will end up accepting the AXA acquisition proposal.


Reproduced from National Underwriter Life & Health/Financial Services Edition, February 13, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.