AMP share price up 5% today as takeover rumours swirl

AMP shares are up 5% on Friday following takeover speculation in the media. It is possible AMP has become a takeover target.

| More on:

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

The AMP Limited (ASX: AMP) share price is up 5.37% on Friday following an article published by The Australian last night. The article suggests that AMP, which has recently been flagged as a potential takeover target for Macquarie Group Ltd (ASX: MQG) and other financial services giants, is being watched by private equity. This comes as the AMP share price has seen dismal performance over the last few years.

What will a private equity takeover mean for AMP shareholders?

If a private equity takeover goes ahead, it will most likely mean that AMP shareholders will receive a cash payment for their shares. This would usually come at a premium to the market price, which currently sits at $1.87. Given that there is currently more than one suitor, this could suggest that potential buyers may need to bid higher in order to gain approval from AMP shareholders.

Currently, AMP appears to be preparing a defence. It has used an exemption to the Corporations Act 2001 to buy up AMP shares through a subsidiary. Previously, it had been disposing shares. If a takeover offer is mounted, this subsidiary's voting power could reduce the likelihood of success. 

How has AMP performed lately?

In March, AMP withdrew its guidance for the 2020 financial year. However, it did announce that its liquidity and capital position remained strong. In 2019, AMP experienced a net loss of $2.5 billion as it wrote down the value of  assets and some of its investments. Underlying profit in 2019 was $464 million. 

AMP is soon to sell its life insurance business. As reported at the company's annual general meeting last month, the proceeds from this will be used to fund the company's strategy with surplus funds potentially being distributed to shareholders if conditions are favourable. Currently, AMP appears to be focused on its current strategy of creating a leaner business while improving its wealth management and AMP Capital businesses.

About the AMP share price

The AMP share price has recovered 73% from its 52 week low of $1.08, however, year to date it is still down by around 3%. AMP shares are down 10% since this time in 2019, reflecting the tough economic conditions as a result of the coronavirus pandemic. Longer-term, its share price has dropped 70% since 2015.

However, as takeover speculation mounts there is likely to be upward pressure on the share price. If media reports are correct, AMP is becoming the latest takeover target for 2020. 

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Ecstatic woman looking at her phone outside with her fist pumped.
Broker Notes

These ASX 200 shares could rise 15% to 30%

Let's see what brokers are saying about these buy-rated top stocks.

Read more »

Ten happy friends leaping in the air outdoors.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a rough start to the trading week for investors this Monday.

Read more »

A female stockbroker reviews share price performance in her office with the city shown in the background through her windows
Broker Notes

JP Morgan initiates coverage of Guzman Y Gomez shares. What's its price target?

Does the broker expect Guzman Y Gomez to outperform?

Read more »

two computer geeks sit across from each other with their laptop computers touching as they look confused and confounded by what they are seeing on their screens.
Share Gainers

ASX tech shares outperformed US tech stocks by 2:1 in FY25. Here's why

Forget the Magnificent 7! Aussie tech shares had twice as much price growth as US tech stocks in FY25.

Read more »

Person pretends to types on laptop drawn in sand.
Opinions

I sold one of my oldest ASX 200 shares last week. Here's why

Why would I sell one of my longest-held stocks?

Read more »

Happy man working on his laptop.
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these shares.

Read more »

Worker on a laptop at an oil and gas pipeline.
Energy Shares

Boss Energy shares have surged 93% since April. Here's what Macquarie expects now

Boss Energy shares remain a favourite for ASX short sellers. Are they in a for a payday or headed for…

Read more »

Bored man sitting at his desk with his laptop.
Share Fallers

Why Antipa Minerals, Northern Star, Pilbara Minerals, and Synlait Milk shares are falling today

These shares are starting the week in the red. But why?

Read more »