1. Why is AXA bidding for MONY? Does the deal make sense for AXA; for MONY sharehold-ers; for management? As a MONY shareholder, what are your concerns about the deal? * The addition of MONY’s 1,300 sales agents would increase AXA’s U.S. sales force ny approx.. 25%, a level of growth that would be very difficault to achieve organically. * The two companies’ distribution systems were geographically complementary. MONY were stronger in important growth structures such as San Fran, Salt Lake and Phoenix, as well as in wholesale distribution. * The companies’ product ranges were also somewhat complementary, with AXA stronger in the variable annuity marketplace and having some new life products that could be offered by the MONY sales force * MONY has been underperforming -> depressed stock price. Low P/B of 0.7 (70 cents on the dollar)
2. How did AXA finance the takeover bid? Explain the structure that AXA used. Why did AXA use this structure? What effects, if any, do you think this method of financing has on the likelihood of the deal succeeding?

* Financed by issuing 110,245,309 ORANS * In recent years many insurance companies has been forced to issue equity due to regulatory reasons. This is not the case for AXA, they therefor want to insure the market that they don’t need extra equity on their books. The ORAN`s in structure in a way that if the deal fell through the ORAN`s would pay of their nominal value or face value of £12.75 plus interest at Euribor (2.4 per annum) * A similar way of financing the acquisition would be rights issue, but the market could then easily interpret it as AXA simply needed to raise equity * Shareholders would receive one warrant for every AXA share held, with 16 warrants entiteling the holder to purchase one ORAN at a price of £12.75 corresponding to a 22% discount to AXA`s share price of £16.37 on