Ares says AMP offer may change

Ares Management has warned a potential deal with AMP may ‘materially differ’ from the indicative offer it’s already made.

AMP’s deal woes continue after an exclusivity period with Ares expired over the weekend. Picture: NCA NewsWire / Steven Saphore

Ares Management, negotiating to buy AMP’s private markets arm, has warned a potential deal may “materially differ” from an indicative offer and be subject to conditions and structural considerations.

Ares said there was no certainty a transaction with AMP would proceed, after a 30-day exclusive negotiating period expired, but if it were to move forward the bid could differ from the terms announced last month in an indicative deal.

“Although Ares and AMP continue discussions on a potential transaction involving AMP’s private markets business, any potential transaction would be subject to a variety of conditions and structural considerations and Ares continues to conduct its due diligence,” the US investment firm said in a Securities and Exchange Commission filing.

“There is no certainty that a transaction will proceed, or the terms, size and structure on which it would proceed. Any transaction could materially differ with respect to size, structure or other material terms in the heads of agreement as previously disclosed. “

On Monday, AMP confirmed the 30-day exclusivity period - for an indicative agreement which would see Ares acquire 60 per cent of its private markets unit - had concluded without a binding transaction.

AMP’s shares declined a further 1.2 per cent on Tuesday to $1.285, following a 3.3 per cent drop the previous day.

AMP’s Monday statement also flagged that Ares had expressed interest in acquiring 100 per cent of the private markets businesses, which houses AMP’s real estate and infrastructure investments and funds.

“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,” the 172-year-old AMP said.

The indicative terms for the Ares deal would have seen the US firm acquire 60 per cent of the $2.25bn joint venture and take management control. AMP was to own the remaining stake.

Sources said Ares’ current preference was to take 100 per cent of the private markets division. It is unclear, though, whether moves to buy the unit in its entirety will be pegged at a similar price to the joint venture valuation.

The continued delays by AMP and changes of direction by Ares are frustrating investors, that want the strategic review to reach a conclusion. Many are pushing for AMP to either secure a deal in a timely fashion with Ares for the private markets unit, or spin off the division on the ASX.

Merlon Capital Partners’ Hamish Carlisle on Monday said the prolonged nature of negotiations with Ares was damaging to AMP’s employees and investor perceptions.

“The only certainty is every additional day (the deliberations continue) it is challenging for the business to move forward and that‘s problematic for all sides,” he added.

Merlon, an AMP shareholder, has been pushing for a spin off of the private markets division for more than two years.

Allan Gray portfolio manager Simon Mawhinney, a large AMP shareholder, is also frustrated at the protracted deal talks, noting on Monday “time is definitely running out” for the parties. He is pushing for either a sale of the private markets unit or a spin-off transaction.

The protracted deal deliberations also come as AMP conducts a leadership and strategy review, after it shrugged off reports that chief executive Francesco De De Ferrari was resigning.