Insights

AMP (ASX:AMP) is more valuable as a whole than in parts: Broker

AMP (ASX: AMP) share price is steady after broker says breaking up the company into separate businesses will not generate increased value.
The post AMP (ASX:AMP) is more valuable as a whole than in parts: Broker appeared first on The Motley Fool Australia. –

A scared piggy bank braces as a hammer comes down, indicating a poor decision to split company

Analysts at UBS Bank say that breaking up AMP Ltd (ASX: AMP) into separate businesses will not generate any increased value for shareholders.

This comes after AMP advised it was undergoing a portfolio review, following a takeover bid by American company Ares Management in November.

The AMP share price is currently trading at $1.735, which is below Ares’ offer price of $1.85.

What did the analysts at UBS say?

Broker UBS said breaking up the financial services company was a bad idea and would not generate increased shareholder value. UBS analysts, in their presentation to clients this morning, said that “stranded costs and capital dissynergies will likely dilute any higher value asset sales”. 

Regarding AMP’s portfolio review, the broker said “the sum-of-the-parts valuation for many financial services companies is worth less than the sum of the whole, as demonstrated in recent transactions across financial services, with significant separation costs and capital dis-synergies often underestimated”.

The broker gave the example of the $3 billion sale of AMP Life to Resolution Life back in July. According to the analysts, that sale was years in the making before it was finally agreed, but “disappointed when it came to capital releases and capital management”.

What’s been happening at AMP?

AMP has experienced a difficult 2020, which included a sexual harrassment lawsuit brought by a former employee. That lawsuit ended in a parliamentary inquiry with chief executive Francesco De Ferrari appearing for questioning in September, and insisting there was no systemic cultural problem at AMP.

AMP’s reputation as one of Australia’s oldest and most trusted wealth managers also took a potentially fatal hit during the 2018 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. 

The subsequent appointment of Mr De Ferrari shortly after the conclusion of that commission was supposed to herald a turnaround for the company. 

However, AMP seemed to raise the white flag earlier this year when it declared all parts of its business open for a possible sale. 

This has atttracted multiple potential buyers, with Ares Management making the first move in November by offering a cash and scrip offer of $1.85.

About the AMP share price 

The AMP share price started the year at $1.92, before plunging to $1.08 in March – its 52-week low.

The share price jumped and has since supported itself at the current level when the Ares’ offer was announced.

The company commands a market cap of $5.96 billion.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Motley Fool contributor Eddy Sunarto 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 Bruce Jackson.

The post AMP (ASX:AMP) is more valuable as a whole than in parts: Broker appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!