Ares offers $1.85 a share for AMP

AMP shares jumped after it said Ares’ offer values the financial services giant at $6.36bn, a 20pc premium on Friday’s closing price.

The AMP logo is reflected in a window in Sydney. Picture: NCA NewsWire

Shares in AMP closed almost 10 per cent higher after the beleaguered financial services giant revealed that its American suitor, Ares, is offering a takeover proposal at an implied value of $1.85 a share.

The offer values the company at roughly $6.36bn and represents a 20 per cent premium on AMP’s closing price of $1.53 a share on Friday, following the largest one-day rally AMP has seen in 15 years.

“Ares’ proposal is at an implied value of $1.85 per AMP share,” AMP told the market on Monday.

“AMP emphasises the preliminary nature of the proposal and discussions between itself and Ares, and that there is no guarantee that a transaction will eventuate and no certainty with regards to price.”

Shares in AMP opened on Monday at $1.625, up 6.21 per cent from Friday and eventually closed at $1.68, up 9.8 per cent.

The news that the New York-listed Ares was making a play for 100 per cent of AMP was confirmed on Friday.

The Australian understands Ares informally approached AMP ahead of a strategic review in September, and if a binding offer eventuates, it will happen in December.

Ares has a market capitalisation of $US10.9bn ($15.5bn) and exposure to infrastructure, real estate, credit and private equity sectors with assets under management sitting at $US179.2bn.

It concluded the third quarter with just under $US2bn in liquidity, $US869m in cash and nothing drawn on its $US1.07bn revolving credit facility.

Ares has confirmed the bid to the United States Securities and Exchange Commission and the broader market.

“As a leading global alternative investment manager, in the ordinary course of business, Ares Management Corporation constantly evaluates numerous strategic opportunities, including large and complex businesses and divisions thereof, that may supplement or offer adjacencies to its core credit, private equity and real estate groups and which often includes making non-binding indicative proposals,” the company submitted.

“As publicly disclosed by AMP Limited, Ares has made a confidential non-binding indicative proposal to AMP consistent with its previously announced strategic review process. Any potential transaction would be subject to a variety of conditions and structural considerations, including extensive due diligence, evaluation of divestiture of certain assets or non-core businesses, and may involve third party co-bidders.

“The diligence and discussions are very preliminary and there is no certainty that any transaction will occur on the proposed terms, within any particular time frame, or at all.”

The Australian Securities and Investments Commission on Monday said it will subject the takeover offer to the standard amount of scrutiny.

“It is standard practice for ASIC to review trading and disclosure in and around major corporate events such as M&A issues, and the AMP instance will be no exception,” an ASIC spokesman said.
The Australian Prudential Regulatory Authority said it would examine the offer as it does for all transactions that involve the acquisition of more than 15 per cent of a RSE licensee

Ares is headed in Australia by former Credit Suisse Australia boss John Knox, with the transaction to be assisted by Morgan Stanley bankers – but it will have to be approved by the Foreign Investment Review board, given the $0 threshold for foreign acquisitions established during the pandemic.

The deal is providing some positive buzz around the company for the first time in years, following a series of crises including the fee for no service scandal revealed at the banking royal commission, and inappropriate behaviour on behalf of executives Boe Pahari and Alex Wade.

Mr Pahari has since been demoted and Mr Wade has left the company. The scandal also culminated in former chairman David Murray’s exit in August.