Ailing financial services giant AMP in multi-billion dollar US takeover bid

Shares in AMP soared after the beleaguered financial services giant revealed a US company had made a multi-billion dollar takeover bid.

Beleaguered financial services giant AMP has received a multi-billion dollar takeover offer from a New York Stock Exchange-listed global asset manager, sending its shares soaring.

AMP said on Friday the bid from Ares Management Corporation was an indicative, non-binding and conditional proposal, and there was no guarantee a deal would follow.

“AMP notes discussions on the proposal are at a very preliminary stage, and there is no certainty that a transaction will eventuate,” it said in a brief statement.

The company continues to review its assets after completing the $3 billion sale of its life insurance business in July, with plans to become to a “simpler, leaner business”.

“AMP has received significant interest in its assets and businesses and is assessing a range of options in a considered and holistic manner, including continuing to pursue its three-year transformation strategy,” the company said.

Investment bank Morgan Stanley noted media reports suggested the offer valued AMP at more than $5 billion, broadly in line with its own valuation of $5.36 billion or $1.60 per share.

AMP executive Boe Pahari’s promotion caused heads to roll. Picture: Britta Campion/The Australian

AMP shares leapt more than 22 per cent to $1.57 in morning trade on news of the takeover bid, giving it a market capitalisation of $4.4 billion.

Ares operates three integrated businesses across credit, private equity and real estate, and has $US179 billion ($254 billion) in funds under management.

Ares declined to comment.

It’s been a torrid year for AMP, which announced the asset review last month just days after key executives stood down over a controversial appointment.

Chairman David Murray and director John Fraser resigned in response to feedback about the promotion of Boe Pahari to head of AMP Capital despite previous sexual harassment allegations against him.

Mr Pahari was demoted to his previous position.

AMP suffered the biggest fallout from the excoriating Hayne royal commission into banking misconduct, which revealed it was among some of Australia’s biggest financial institutions that charged customers for services that were not provided or delivered poor value.

AMP shares have been in free fall in recent years, plunging from $6.70 in February 2015.

Even after surging on Friday, their one-year return is minus 14.4 per cent.

Originally published as Ailing financial services giant AMP in multi-billion dollar US takeover bid