AMP carve-up likely as Ares Management bid gets rolling

Ares Management is reportedly looking for space at the top of Chifley Tower just up the road from AMP headquarters but its $6.4 billion proposal for the company is still some way off completion.

The fact Ares boss Mike Arougheti hired former Credit Suisse boss John Knox to be his local head and its first play is AMP is of course full of irony.

Credit Suisse is advising AMP on its portfolio review along with Goldman Sachs and it obviously suits the vendor to have a credible bid on the table.

This makes alternate bidders think again in terms of their strategy and makes them either raise the auction price or run for cover.

Most would see AMP as a logical candidate to be split up, with AMP Capital the prize and AMP bank a valued addition to put up for sale.

AMP boss Francesco de Ferrari was a long time Credit Suisse executive, director John O’Sullivan was the local chair and former AMP chair David Murray a long time adviser.

Ares known interest in AMP predates AMP officially putting itself up for sale in early September so it is keen, but while the indicative price of $1.85 a share is above the $1.50 a share trading price but this is a stock that was trading over $6 a share five years ago.

AMP is damaged goods but chair Debra Hazelton will be cautious in selling too cheaply.

Ares, which was born from Apollo Management 23, years ago has the fire power and the logical interest in AMP and reportedly has expressed interest in the lot.

But whether it wants to buy into the litany of problems facing AMP right now starting with three class actions, remains to be seen.

US firms have traditionally not been keen to buy into litigation.

To buy all of AMP would require getting a banking licence and that too comes with regulatory baggage.

The AMP board met on Thursday afternoon and in no time word was out that Ares had been in the diligence room for a couple of weeks.

Just how many others are there too is not known.

There are myriad alternate strategies but the popular tip says Ares is in the diligence room but will concentrate its efforts on AMP Capital, leaving the rest for someone else.