The AMP Ltd (ASX: AMP) share price is slipping this morning despite the S&P/ASX 200 Index (ASX: XJO) financial giant announcing it will finally begin to offload its real estate and domestic infrastructure business.
The first stage of its long-awaited sale to Dexus Property Group (ASX: DXS) will bring in around $337 million. However, final completion – and another $50 million – still hinges on Chinese regulatory approvals.
The AMP share price is currently trading 0.3% lower at 98.2 cents.
But that's a better performance than the broader market. The ASX 200 is tumbling 0.78% at the time of writing. Meanwhile, the Dexus share price is down 1.15%, trading at $7.75.
Let's take a closer look at the latest news of AMP's massive divestment.
AMP share price slumps amid simplification milestone
AMP's sale of Collimate Capital's real estate and domestic infrastructure equity business was once worth up to $1 billion, but those days have passed.
After lengthy delays, the base purchase price was dropped to $225 million and any potential funds under management-based earn outs forfeited earlier this year. But today has brought brighter news.
The pair have officially finalised a previously-flagged alternative transaction structure. The first stage of the new plan for the sale is set to complete on Friday.
That will see Dexus taking on the business without AMP's interest in China Life AMP Asset Management (CLAMP) being transferred out. The transfer is yet to be approved by regulators in China.
At first completion, Dexus will pay $175 million of the $225 million base purchase price, as well as $105 million for sponsor investments and $57 million for cash on the business' balance sheet – a total of around $337 million.
The remaining $50 million of the base purchase price will be paid on final completion. That is, as long as CLAMP's transfer occurs by 30 September 2024.
Looking forward
AMP CEO Alexis George said the sale would be "a key pillar of our strategy to simplify AMP". He added:
The sale allows AMP to have a clear focus on our go forward businesses of retail banking and wealth management in Australia and New Zealand.
We will continue to build on the hard work of the past 12 months to position AMP to win in those markets, deliver for customers and drive value for shareholders.
AMP will now begin a review of its balance sheet and cost base. It will do so with the view to reduce debt and return excess liquidity to shareholders.
An update on the reviews will be published sometime before it drops its first-half earnings in August.
