AMP shareholders in for more pain with Ares deal still up in the air
AMP’s first half profits fell 74% to $115 million.
Long suffering AMP (ASX: AMP) shareholders face more uncertainty after the fund manager revealed there is “no certainty” that a deal with US investment firm Ares would proceed.
AMP also revealed that it was possible that Ares could emerge with 100% of its private markets business, after the exclusivity period for negotiations expired without a contract.
In February, AMP signed a non-binding agreement to carve out AMP Capital’s private markets business and sell 60% to Ares for $1.35 billion.
Several options now open
The announcement leaves several possibilities open.
One is a 100% sale to Ares at an undetermined price, a second is a partial sale to Ares at either the announced or a different price and the third is Ares withdrawing from the deal altogether.
A fourth possibility is that another party will try to negotiate to buy parts or all of AMP now that the exclusivity period is over.
Uncertainty around the size and future of the proposed deal comes on top of revelations that while chief executive Francesco De Ferrari remains in charge at this stage, discussions on succession planning were ongoing.
That followed reporting that Mr De Ferrari was about to resign from AMP, which was chased by a trading halt and two announcements by the company that Mr De Ferrari remained the chief executive officer at this stage.
AMP and Ares “continue to work towards a potential transaction”
In a statement to the ASX, AMP said: “AMP and Ares continue to work towards a potential transaction and Ares has expressed interest in acquiring 100% of the private markets businesses.”
“There is no certainty that a transaction will proceed, or the terms, size or structure on which it would proceed. Any transaction would remain subject to approval of AMP shareholders.”
Under the earlier plan, AMP was going to keep 40% of the AMP Capital unit, which deals in infrastructure and real estate investments.
Ares pulled out of earlier $6.36 billion AMP bid
Before that, Ares withdrew a $6.36 billion takeover proposal for the whole company, instead continuing talks over buying part of AMP Capital – considered the most valuable unit within AMP.
AMP has been in the wars after the Hayne royal commission revealed widespread misconduct by the company, leading to many clients being paid compensation or taking their investments elsewhere.
Investors have also been troubled by the botched handling of a sexual harassment complaint which led to the resignations of chairman David Murray and director John Fraser.
In another stock exchange release, AMP revealed that it had agreed to end the management agreement of a New Zealand-based listed real estate investment trust (REIT) for $197 million.
AMP Capital said it would get about $80 million in profit from the deal.