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AMP sees no value in NAB approach
SYDNEY, Australia (CNN) -- Embattled Australian insurer and funds manager AMP Ltd has confirmed it spoke to potential suitor National Australia Bank (NAB) in May but concluded the bank's proposal was not in AMP shareholders' best interests. The NAB, Australia's biggest bank, built a strategic 5.4 percent stake in AMP earlier this week but said it is not interested in a takeover until AMP splits off its struggling UK business. The NAB sought to buy AMP for about Aust. $21 a share in 1999, but that offer was quickly rebuffed by management. AMP shares have plummeted in the past two years, largely because of the downturn in global equity markets and the subsequent impact on its UK businesses. The shares touched a record low of A$4.26 on August 7, ahead of a record half-year loss of A$2.16 billion unveiled on August 20. The shares have run up sharply in the past week on expectations a predator was in the market. They closed Friday at A$6.67, up 5 percent. On Wednesday, the NAB sought to buy up to 11 percent of AMP, but succeeded in getting only 34.3 million shares -- or about 2.2 percent -- at $6.00 a share. Its own wealth management arm MLC already held 3.2 percent. AMP plans to split its British and Australasian operations at the end of the year, which would leave the way clear for NAB to make a full takeover offer. AMP chief executive Andrew Mohl said Friday he wanted to expand on media reports of his discussions with NAB chief executive Frank Cicutto in May. He said the two men spoke after Cicutto initiated an approach. He said at this meeting, NAB expressed interest in buying AMP's Australian financial services business. Mohl said he told NAB that the AMP's demerger strategy announced on May 1 was seen as the best way to realize maximum value for shareholders. Mohl said NAB's proposal for an "off market" private sale -- "without any of the benefits of an open auction" -- was not in AMP shareholders' best interests. Further, it would destroy value in other parts of AMP. AMP Henderson, for example, has about two-thirds of its funds under management sourced from the AMP Australian financial services business. Mohl said NAB was advised that if it wanted to take the matter further, it would have to put forward a "highly attractive offer with minimal conditions" that the AMP board could consider and take to shareholders. Brokers have been critical of NAB's attempted share raid this week, claiming it could have bought the same volume through normal daily trading. On average, about 30 million AMP shares change hands daily. Volume soared to 145 million shares on Thursday and reached 73 million shares on Friday. NAB shares closed 0.8 percent lower at A$31.09.
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