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Ares Scraps $4.9 Billion Bid for Troubled Wealth Manager AMP

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Matthew Burgess
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(Bloomberg) -- Ares Management Corp. scrapped a A$6.4 billion ($4.9 billion) bid for Australian wealth manager AMP Ltd., sending the shares tumbling in the latest setback for long-suffering investors still reeling from years of scandal.

AMP was advised by Ares overnight that it doesn’t intend to proceed with its bid after making an indicative takeover approach last year, the Sydney-based company said in a statement Thursday. Still, talks are ongoing over Ares’ interest in AMP’s asset management unit, Chief Executive Officer Francesco De Ferrari told reporters Thursday.

The collapse of the deal is a blow for shareholders seeking a quick, clean exit after Ares was given access to AMP’s books in October, having made an indicative offer of A$1.85 per share. The stock slumped as much as 11% in early trading Thursday, and was at A$1.39 at 10:10 a.m. Sydney time. It never traded above the offer price amid skepticism a deal would be struck.

The 172-year-old firm effectively put itself up for sale last year when a sexual harassment scandal led to its second boardroom shakeout in two years, during which the stock lost about three-quarters of its value. It will now focus on its sweeping three-year turnaround plan to cut costs and repair its reputation, which was damaged by revelations it charged fees to clients for services they didn’t receive, then lied to regulators about the wrongdoing.

AMP confirmed its transformation plan was the best outcome for AMP Australia, which includes its wealth management and banking units, and its New Zealand wealth management arm, signaling they are no longer for sale. It will continue review options for its asset management unit, including exploring partnership options, the statement said.

“We’re very convinced of our strategy, the opportunity to re-pivot to real assets, and so parties that can help accelerate that and create more value for our clients, for our employees and for our shareholders, are being considered,” De Ferrari said on a call. Ares has “a lot of complementary skills with our asset management business and we are continuing to engage them constructively on their interest for AMP Capital.”

A representative for Ares declined to comment.

Separately, AMP said underlying profit fell 33% to A$295 million in the year ended Dec. 31, the lowest in at least a decade as the embattled wealth manager contended with volatile markets, a mounting customer compensation bill and an exodus of customers.

For highlights from the earnings report, click here

Clients pulled A$8.3 billion from its funds management businesses last year, in addition to A$1.8 billion in lost corporate pensions mandates, continuing a trend that saw more than A$10 billion withdrawn in the previous two years.

In another blow to shareholders, AMP confirmed it won’t pay a final dividend for a second year. The board is committed to restarting initiatives to give cash back to shareholders in 2021, including buybacks, once the portfolio review has been completed and subject to the company’s performance, AMP said.

(Adds CEO comment from second paragraph, shares in third paragraph)

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©2021 Bloomberg L.P.

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