Hopes of $6bn AMP bid fading

Financial services group AMP is understood to have received multiple offers for various parts of its business. Picture: Hollie Adams/The Australian

Financial services group AMP is understood to have received multiple offers for various parts of its business, but based on its share price, it appears some investors may be losing confidence that a firm $6bn-plus company bid from Ares Management will emerge.

The AMP share price has recently been trading lower, falling in the past week to $1.60 from over $1.70 when news about an offer from Ares surfaced.

It takes its market value to about $5.5bn.

Sources say it appears unlikely that a binding offer will emerge from the private US-based investor, given the volume of trading out of the stock and the lack of news on the progress of the AMP strategic review.

However, others have attributed the lower price to a hedge fund liquidating its position.

AMP confirmed in October it had received an indicative proposal from Ares by way of scheme of arrangement, and it is understood the bid valued the company at $6.4bn or $1.85 per share.

The offer was a combination of cash and scrip and Ares was granted access to a data room to carry out due diligence.

Ares, which counts former Credit Suisse Australian head John Knox as its Australia and New Zealand chairman, is known to be keen to buy just the AMP Capital arm of the company and its plan was to find a buyer for the remainder.

Its adviser Morgan Stanley is said to have reached out to a number of parties about four to six weeks ago to gauge their interest about an acquisition of the AMP bank and wealth management arm.

However, some believe there’s little interest.

DataRoom understands that Bank of Queensland and Bendigo Bank have been weighing an acquisition, but their interest comes down to price.

They are only interested if they can secure the rival at its net asset value, which is thought to be about $2bn.

However, most say that breaking up the business would be difficult.

Some have taken the recent appointment of the adviser Blackpeak Capital by the board as a signal that AMP may consider itself vulnerable.

Credit Suisse and Goldman Sachs are working for the company on asset sales.

Another question is whether a bid at $1.85 per share from Ares will be high enough to appease the AMP board.

It is understood that AMP’s advisers are working to establish what other suitors are prepared to pay for its assets as Ares slowly carries out due diligence.

AMP is also assessing Ares, given its offer would see its shareholders gain an interest in the suitor.

AMP recently ran an auction for the sale of its real estate platform, but the process was put on ice when interested parties were hesitant to sign confidentiality agreements to enter the data room.

The AMP bank provides home loans, deposit and transaction accounts and self-managed super fund products.

Its wealth management arm provides financial advice and superannuation, retirement income, banking and investment products.

It also provides corporate super products and services for workplace super and self-managed super funds.

The most valuable part of the company is the global investment management division, AMP Capital, that services institutional client, and manages real estate and infrastructure assets such as shopping centres, airports and trains, along with equities and fixed income investments.

As of a year ago it had $203bn worth of assets under management.

AMP has embarked on a strategic review for a potential sale of assets after its performance declined in the wake of the Hayne royal commission findings.

In July, AMP Capital’s head of real estate, Carmel Hourigan, left to head office investments at Charter Hall.

Her departure, and that of other senior executives, followed the controversial decision by AMP to appoint Boe Pahari as head of AMP Capital despite a $500,000 fine for sexual harassment.