American private equity firm Ares Management has scrapped its $4.9bn buyout offer for Australian wealth manager AMP.
AMP said that it has been informed by Ares that it does not intend to go ahead with its non-binding indicative proposal for the company.
Go deeper with GlobalData
Ares, which previously offered to acquire 100% of AMP with each share priced at $1.85, is still interested in AMP’s $190bn asset management unit, AMP Capital.
The unit, which brings in more than a third of the company’s underlying earnings, invests across unlisted real estate, infrastructure and global markets.
AMP said it will continue to ‘engage constructively with Ares in relation to AMP Capital’ as part of its portfolio review.
Ares dropped its offer partly due to concerns over the declining performance of AMP’s wealth management arm, Bloomberg reported citing people familiar with the matter.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThe company said that net profit after tax (NPAT) at its Australian wealth business plummeted 44% year-on-year to A$110m in FY 20 after investors pulled out A$8.3bn of funds.
According to sources, AMP Capital’s expertise in managing infrastructure assets for third-party owners is of significant interest to Ares.
AMP CEO Francesco De Ferrari said that the company is currently in talks with Ares regarding the unit, including options for a potential partnership.
AMP decide to sell itself last year after it got caught up in a sexual harassment scandal. The company reportedly lost nearly three-quarters of its value during this period.
Results and Dividend
AMP’s underlying NPAT in FY20 slumped to A$295m from A$439m a year ago.
However, on a statutory basis, it swung to a profit of A$177m from a A$2.5bn loss in the previous year.
Volatile investment markets and outflows hit assets under management, which dropped 8% in Australian wealth management and decreased 7% in AMP Capital.
The company also postponed the final dividend for a second year. It said that the board is committed to restarting initiatives to give cash back to shareholders this year once portfolio review is completed.
