SPECULATION that French insurance giant AXA was preparing to mount a bid for Irish Life & Permanent was dismissed as premature last night.
The bid rumours began in London, causing a huge surge in the group’s share price, which was up by over 12% at €3.70 at one point in the afternoon.
As the markets took stock the price retreated and ended up 6.09% at€3.50 on the day.
Irish Life & Permanent’s spokesman said the company “would not comment” on the report while AXA also refused to address the rumour that gripped the London market initially.
Market sources in both Dublin and London believe the bid talk to be premature given that the third Banking force issue still has to be resolved by the Irish banks.
Kevin McConnell, head of research, Bloxham Stockbrokers, thought an approach from AXA next year more likely.
It did not make sense for AXA to stick its toe in the water until the Government has sorted out the third bank question first, he said.
He did not rule out a move by the French general insurer “next year”, he said.
When the mortgage business transfers to the EBS then a move by AXA on the valuable life and pensions business is a strong possibility.
Traders said the level of trading in Irish Life was relatively small in London despite the strong rumour and was not at the kind of level that would suggest a bid was imminent.
The share movements yesterday are seen as a clear signal to the market that AXA has its sights on the life and pensions business once the Permanent TSB wing has been sold off.
Had a formal approach been made that could lead to a bid, IL&P would have been required to issue a statement to the Stock Exchange.
Sources generally said that the status of the bid was just rumour and nothing else at this stage.
Speculation in London suggested AXA might be willing to pay €6 for the shares, almost double yesterday’s closing price.
The shares hit a high of €22.80 in 2007 when the market was at its peak.
IL&P is due to hold a shareholder meeting later this month to approve the setting up of a new holding company.
This move is expected to pave the way for the transfer of the mortgage business, trading as Permanent TSB, to a new bank to serve the Irish market.
Talks to set up the new bank started last week when Finance Minister Brian Lenihan told the board of Irish Nationwide Building Society to commence merger talks with the EBS.
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