AMP Says $2.3 Billion Life Unit Sale ‘Unlikely’ to Proceed
AMP Says $2.3 Billion Life Unit Sale ‘Unlikely’ to Proceed
(Bloomberg) -- Australian wealth manager AMP Ltd.’s planned overhaul of its scandal-hit business is in tatters after the A$3.3 billion ($2.3 billion) sale of its life unit collapsed. The shares plunged to a record low.
The 170-year-old firm said Monday the deal with U.K.-based Resolution Life is “highly unlikely to proceed” because of challenges in meeting conditions imposed by New Zealand’s central bank.
The sale was a key part of AMP’s plans to re-position the business after becoming embroiled in a string of scandals exposed by an inquiry into misconduct in Australia’s financial industry, including charging wealth customers for services they never received.
AMP shares slumped as much as 18% in Sydney trading, hitting a record low of A$1.77. The stock has slumped 50% in the past year, slicing the company’s market value to A$5.3 billion.
The Reserve Bank of New Zealand won’t approve the deal unless Resolution Life agrees to have separate, ring-fenced assets held in New Zealand for the benefit of policyholders there, an arrangement it said was inconsistent with its current branch structure.
“As a result, Resolution Life does not expect RBNZ to approve an application that would satisfy the condition,” it told AMP.
| To read more on AMP’s woes: |
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AMP Shares Slump as Regulator, Morgan Stanley Take Firm to Task |
AMP Fund Bleeds Another A$1.8 Billion as Misconduct Woes Mount |
AMP Shares Slump as Dividend Slashed, Advice-Scandal Costs Mount |
The deal’s failure is “exceptionally disappointing” as the sale “is a foundational element of AMP’s strategy,” the Sydney-based company said in a statement Monday.
AMP Likely to Get Less for Life Unit as Deal Crumbles: Macquarie
The two firms are now working to determine whether there is a solution, but a new deal is “not certain,” AMP said. If a revised deal can’t be reached, AMP intends to retain and manage the unit as a specialist life insurance and mature business.
Given the uncertainty surrounding the deal, AMP said it doesn’t expect to pay an interim dividend for the first half of fiscal 2019.
To contact the reporters on this story: Peter Vercoe in Sydney at pvercoe@bloomberg.net;James Thornhill in Sydney at jthornhill3@bloomberg.net
To contact the editors responsible for this story: Edward Johnson at ejohnson28@bloomberg.net, Keith Gosman
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