AMP share price dips despite $337m sale win

The first stage of the company's long-awaited sale to Dexus should complete on Friday.

| More on:
A male investor wearing a white shirt and blue suit jacket sits at his desk looking at his laptop with his hands to his chin, waiting in anticipation.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The AMP share price is sliding 0.3% right now to trade at 98.2 cents
  • It comes as the company revealed it has officially finalised an alternative transaction structure for the sale of Collimate Capital’s real estate and domestic infrastructure equity business to Dexus
  • The first stage of the sale is set to complete on Friday, with final completion still conditional on Chinese regulatory approval

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.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Mergers & Acquisitions

Animation of man and woman shaking hands on a deal on top of gold coins.
Mergers & Acquisitions

Which ASX companies are deploying dividends to secure a $1.9 billion deal?

Dividends appear to have sealed the deal for an ASX mega-merger.

Read more »

2 workers standing in front of a wind farm giving a high five.
Energy Shares

Origin shares fall despite 'highly strategic' $300m renewable energy acquisition

Origin is taking a big step in its clean energy transition.

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Consumer Staples & Discretionary Shares

Ansell shares jump 14% amid blockbuster acquisition

Ansell is making a big acquisition and it could be a big boost to its earnings.

Read more »

A male ASX investor on the street wearing a grey suit clenches his fist and yells yes after seeing on his ipad that the Paladin share price is going up again today
Technology Shares

This ASX All Ords small-cap is soaring 33% on a takeover bid

This tech stock has received a takeover offer. But is it enough?

Read more »

Health professional putting on gloves.
Mergers & Acquisitions

Ansell share price hits pause as company gloves up for $975 million acquisition

Ansell shares won't be trading for a while...

Read more »

Smiling elderly couple looking at their superannuation account, symbolising retirement.
Financial Shares

Suncorp share price hits new 52-week high amid $375m asset sale

Suncorp is offloading another asset as it reshapes its business.

Read more »

a woman drawing image on wall of big fish about to eat a small fish
Mergers & Acquisitions

Guess which ASX 300 stock is jumping 9% after receiving a takeover offer

A South Korean chaebol has its eyes on this stock.

Read more »

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Mergers & Acquisitions

APM share price placed on ice as $1.8 billion deal goes dud

It's all question marks and raised eyebrows for shareholders of this ASX company today.

Read more »