Well, it looks like AXA and MONY pulled off their deal, which now only awaits approval by regulators.

MONY shareholders voted the other day and approved AXAs offer of 31 dollars and change per each share of MONY stock. It wasnt exactly an overwhelming vote, but it carried the day, nonetheless.

This proved to be an unusually contentious acquisition in the usually decorous life insurance business. By comparison, Manulifes offer and subsequent acquisition of John Hancock was a piece of cake. But I guess thats what can happen when money managers and other investment firms hold large portions of your stock and feel that the price offered by the would-be acquirer is simply not sufficient.

The money managers argument in this case was that the $31 offer per share for MONY was actually below the New York insurers book value. Another of their objections was that the payout to some of MONYs senior executives was just too, too rich.

This is a case where one can understand but not necessarily sympathize.

It always seemed to me that MONY was one of those mid-sized life insurance companies that demutualized with the endgame of cashing out always being in someones sights. It was to be hoped, in order words, that it would only be a matter of time until a larger insurer with deep pockets came along and said, yes, we would make a nice fit.

Its no secret that MONY has had its ups and downs over the years. This was a case where senior management had to work hard for the demutualization (even more dogs and ponies than usual) and for that reason I find it hard to begrudge them their rewards (rich as those rewards may be).

From everything Ive ever heard, demutualization is an extremely arduous process even for companies with the strongest of reputations. Changing to a public company is not simply like trying on another pair of khakis at the GAP. Why shouldnt those executives who shepherd their companies through the process get a decent payout?

As for the argument that the price was too low, I think those money managers who live and die by the market would have to agree that the market did indeed ratify the price. The plain fact is that no company came forward to offer a higher price.

Now, its true that with only a few exceptions, the world is experiencing a shortage of white knights. But in these kinds of situations where a bloc of shareholders is voluble about expressing their discontent, someone usually can be made to stir in the wings if it looks like the initial bidder is getting a steal.

Here no one did. The market sent a strong message. Other than the money managers, it seems that investors got that message. According to MONY, holders of 84% of the MONY shares in the hands of retail investors voted in favor of the deal.

I think what this acquisition was about, really, is distribution. One and a half billion dollars is not all that much for a company like AXA, so I dont think it was a question of lusting for assets, etc.

With the deal, AXA gets MONYs 1,300 career agents to join with its own 5,000 agents. At the time the deal was announced last September, AXA Financial President Christopher Condron said, Theres a very good and logical fit, and MONY is strong in some high-growth areas where we are not so strong, such as San Francisco, Salt Lake City and Phoenix.

AXA also gets a life insurance wholesaling operation and access to MONYs corporate-owned life insurance products.

And lets not forget Advest Inc., a regional securities broker out of Hartford.

All in all, not a bad deal for the Paris-based parent of Equitable Life Assurance Society of the United States. And now its done.

Steve Piontek

Editor-in-Chief


Reproduced from National Underwriter Edition, May 21, 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.