AMP share price rises following completion of $3.0 billion Life sale
The AMP share price opened at $1.92 per share after the wealth manager announced the completion of the much-hyped AMP Life sale to Resolution Life.
Beleaguered wealth manager AMP Limited (AMP) today announced that it had successfully completed the sale of AMP Life to UK-based Resolution Life. Today’s announcement marks an important milestone for the firm, which in 2019 announced a transformative plan aimed at simplifying, strengthening and scaling the business in a post-Royal commission world.
'The sale of the Life business is a foundational step in our strategic transformation to become a simpler, client-led and growth organisation,' said AMP's CEO Francesco De Ferrari.
Yet the Life sale itself has faced a number of stumbling blocks over the last year, with AMP in July 2019 announcing that the AMP Life sale had fallen through, which at the time was set to fetch the firm $3.3 billion.
In response the share price cratered 16%.
The deal was eventually renegotiated, mind you, with AMP revealing a salvaged $3.0 billion sales plan as part of its interim 2019 results. That sale went through today – comprised of a $2.5 billion cash consideration and AMP gaining a $500 million equity stake in Resolution Life Australia.
AMP noted that the final cash proceeds from the sale would be 'subject to a number of post completition adjustments,’ which would ultimately see AMP walk away with $1.1 billion.
As part of the sale, AMP further said it would continue to provide the now Resolution Life owned AMP Life with technology and administrative services for the following two years.
'Our Life teams will move to Resolution Life and will continue to support clients who will see no changes in their policy terms of conditions,’ the AMP CEO said.
AMP is set to report its Interim Results on 13 August.
A potential dividend?
While it was noted that the company would first use the surplus funds to progress AMP’s transformation strategy, the firm noted that there was potential to return capital to shareholders. Specifically, in a statement to the market, AMP said it:
'Will assess all capital management options with the intent of returning the excess above the target surplus to shareholders, subject to unforeseen circumstances and current economic business conditions.’
The company last paid a dividend of $0.04 per share in March 2019.
AMP share price runs higher on Life sale
In response to today’s announcement, investors bid the AMP share price some 2.26% higher, to $1.875 per share, at the time of writing.
At its 52-week low AMP traded at $1.080 per share.
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