Why the AMP (ASX:AMP) share price could soar today

The AMP Limited (ASX:AMP) share price could soar today after the diversified financial business announced it has received a takeover offer. 

The AMP Limited (ASX: AMP) share price could soar today after the diversified financial business announced it has received a takeover offer.

AMP’s exciting news

AMP confirmed today that it has received an indicative, non-binding, conditional proposal from Ares Management (a US based business with $179 billion of assets under management).

Ares is offering to buy the whole business.

AMP noted that the discussions are at a “very preliminary stage” and there is no certainty that a transaction will eventuate.

Meanwhile, AMP is continuing to progress its portfolio review. It has received significant interest its assets and businesses. The leadership is assessing a range of options, including continuing its three-year transformation strategy.

According to reporting by the Australian Financial Review the offer is said to value AMP “well north of $5 billion, not including debt”. Ares has been given access to AMP data and due diligence materials to be able to make a better bid.

Summary thoughts

This is an exciting development for AMP. Whilst there’s no guarantee of a binding bid, it shows that external investors think there is value in the existing AMP business. However, I wouldn’t want to buy shares because of the limited upside and no guarantee of an offer. AMP still has a lot of work to do to turn things around.

I’d rather buy other ASX dividend shares like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) which has a clearer path to growth.

At the time of publishing, Jaz owns shares of WHSP.

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