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You are here: Home / Investment News / Market awaits buyout details in AMP results…

Market awaits buyout details in AMP results…

February 7, 2021

Debra Hazelton: AMP chair

AMP will release its full-year results next Thursday with the update also expected to include details on the progress of a A$6.3 billion plus takeover bid.

The ASX-listed financial services giant fielded the buyout offer from US investment firm Ares Management last October following years of corporate volatility that had seen its share price sink to just over A$1.

Since listing on the ASX in 1998, AMP has gone through several ups and downs, reaching a nadir in the 2019 Australian Royal Commission (RC) into financial services that triggered management and board changes in addition to multi-million dollar fines.

Post the RC, the company embarked on a corporate refresh process under new chief executive, Franceso De Ferrari, that initially included plans to offload the AMP NZ wealth business among other changes.

However, just months after completing the sale of its life insurance business (a key piece of the AMP restructure), the plan stalled as recently promoted AMP Capital chief, Boe Pahari, was forced to step down amid sexual harassment revelations.

The news led to further board and management moves, including the appointment of new chair, Debra Hazelton, who opened up AMP to offers, citing a surge of “unsolicited interest in its assets and businesses”.

Little news has leaked out since the Ares bid went public although Australian press reported last month that Macquarie was in the frame to acquire AMP Bank as part of the deal.

Last week The Australian publication suggested Ares was unlikely to table a binding offer prior to AMP results update this Thursday.

In the interim, the uncertainty has taken its toll on AMP wealth and funds management operations on both sides of the Tasman. For example, many institutional investors have cut mandates or put AMP Capital under review pending a resolution of the ownership status.

Investors, staff and competitors will hoping the AMP results announcement this week offers some closure, or at least clues.

With its corporate future hanging in the balance, however, AMP continues to face legal fallout in the post-RC climate.

In a ruling last week, the Australian Federal Court ordered AMP to release details of its controversial buyer-of-last-resort (BOLR) agreements with financial advisers.

AMP unilaterally revalued the BOLRs – slated as a key concern in the RC hearings – in 2019, dramatically reducing potential purchase payments to many financial planning businesses that had signed the agreements.

Under the BOLR contracts, AMP committed to buy financial advice businesses at a set multiple, often linked to the amount of in-house products on the books. A group of AMP Financial Planning clients launched a legal challenge to the BOLR move last year.

Blackpeak Capital is advising AMP on Ares offer and other potential suitors. AMP last traded about A$1.57.

 

 

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