AMP shareholders were stuffed yesterday – no final dividend and no takeover offer from US investment firm Ares.
At the same time AMP said other assets, such as AMP Bank, were no longer up for sale as it’s now back to the drawing board to see if management can improve the company’s performance, perhaps with an eternal partner or two in a couple of businesses.
AMP revealed the withdrawal of Ares’ approach and the change of strategy in its 2020 full year results on Thursday that also confirmed the dropping of the final dividend after a sharp slide in earnings for the full year.
AMP included an update on its portfolio review launched last September after it had received unsolicited offers for its businesses – especially AMP Capital.
Ares had offered to buy 100% of AMP’s shares for $1.85 a share in an approach in October but after conducting due diligence, the firm has now withdrawn its offer.
AMP said negotiations with Ares were continuing, adding it was possible to carve out the company’s most lucrative asset, AMP Capital, as part of a new deal.
Ownership of AMP Capital and its near $100 billion in assets may have been what Ares was after in its approach last year.
AMP reported its statutory profit for the 2020 year was $177 million, which reversed the $2.5 billion loss 2019 after the sale of its Life business and the huge outflow of clients and funds from the business in the wake of the disclosures – especially at the Hayne banking and finance royal commission – about the rotten way AMP had been treating many of its customers for years.
The outflows slowed in 2020, but still totalled nearly $2 billion.
The outflows were partly caused by $1.8 billion being withdrawn under the federal government’s emergency scheme that allowed Australians affected by the pandemic to cash-out part of their retirement savings.
The volatility caused by COVID-19 also contributed to profits falling in most of AMP’s business, including AMP wealth management (44%), AMP Bank (16%) and AMP Capital (32%).
Given those falls and the continuing uncertainty with COVID 19 and the vaccination rollouts, its no wonder AMP’s directors opted to hold back a final dividend.
Shareholders received a special payment of 10 cents a share was paid for the June half, but AMP said the board was committed to restarting dividends this year, “subject to the completion of the portfolio review, market conditions and business performance”.
AMP’s board has also pulled its wealth management and bank businesses, AMP Australia and AMP Bank, from the sale process and will now return to focusing on chief executive Francesco De Ferrari’s three-year transformation strategy.
“AMP continues to review options for maximising the ability to grow and invest in AMP Capital including exploring partnership options,” the company said.
“The board will provide an update on the outcome of ongoing discussions as soon as possible.”
