1.

AXA was bidding for MONY because: the addition of MONY s 1,300 sales agents would increase AXA s U.S. sales force by approximately 25%, a level of growth that would be very difficult to achieve organically. Moreover, the two companies distribution systems were geographically complementary, with MONY stronger in some important growth locations. 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. The deal quickly came in for substantial shareholder criticism. The structure of shareholding in MONY had been somewhat proscribed by conditions imposed on demutualization. During the first five years following demutualization, shareholders could not hold more than 5% of MONY without the permission of the New York Superintendent of Insurance. What s more, many shareholders felt that AXA s offer was simply too low. They argued that MONY was selling the company too cheaply and should instead invite competing bids through an auction. Additional, shareholders were concerned that MONY s management was excessively keen to agree to a sale in order to trigger compensation payments resulting from the change in control. MONY s management had come to believe that MONY was simply too small to operate effectively in an industry that was in need of consolidation. The two companies would fit well together given their similar operating styles and a shared core belief in the strategic importance of distribution and the value of the advice-based model. If I were a MONY shareholder I would concern about the fact that the offer price was lower than current market MONY stock price. Moreover, the offer price represented only 70% on the dollar of MONY s book value of $43 per share. 2. To fund the cash offer, AXA issued 110,245,309 ORANs. These debt securities of AXA had an unusual structure. If the AXA -MONY takeover deal wasn t completed by December 22, 2004, then the ORANs would pay off t heir nominal or face value of 12.75, plus interest at Euribor. But if the takeover deal went through, then the ORANs would each convert into one share of newly -issued AXA stock. Shareholders would receive one warrant for every AXA share held, with 16 warrants entitling the holder to purchase one ORAN at a price of 12.75. This was a 22% discount to AXA s share price of 16.37 on September 17, 2003. The financing was structured so that AXA would not be left with any new equity financing on its books if the d eal fell through. 3. Shareholders would receive one warrant for every AXA share held, with 16 warrants entitling the holder to purchase one ORAN. The total value of the ORANs issued was around $1.7 billion. If the deal is not complete, ORAN is priced at 12.75. However, the probability of deal succeeding is much higher than 0%, the ORAN is not fairly priced. On February 9, 2004 the price of the ORAN was 16.60. The value of ORAN without deal succeeding of 12.75 and stock price of

$18.41 imply a 68.3% prob ability of the deal succeeding. Thus the price of ORAN at issue should be 14.92. MONY s financial advisors, CFSB, stated that the $31 per share by AXA to be a fair price for MONY s shares.

4. I would want to buy MONY s stock at the fair price of $31. The stock of MONY stock on February 2009 is overvalued because investors are misled by the news of MONY would be taken over by AXA.

5. If the deal is not approved, the company would face ratings downgrades, lower fee income, and poor earnings outlook, resulting in staff fleeing the company , and that an abrupt change in management would only exacerbate these risks. As my calculation demonstrated above, the offer price cannot present all of MONY s book value. The average price-to-book valuation of life insurance companies was 196%. Thus, we should not sell the company at $31.55.