AMP Limited (ASX: AMP) is now considering selling more of its business. Should it be broken up?
AMP has suffered significantly since the Hayne Royal Commission revealed a number of problems at AMP and the big banks. The diversified financial business recently sold AMP Life for $3 billion and now it’s thinking of more asset sales.
More AMP sales?
The AMP Board is going to review its whole portfolio of assets and businesses. Whilst AMP is committed to its transformation strategy, the company acknowledged that it sometimes receives unsolicited interest in its assets and businesses. There has been a recent uptick in interest and enquiries.
AMP will review all the options in a “considered and holistic manner”. It will think about the merits as well as the potential separation costs and ‘dis-synergies’ to focus on maximising shareholder value.
The review may conclude the existing mix delivers the best value and therefore there wouldn’t be a recommendation to pursue any specific transaction.
AMP Chair Debra Hazelton said: “The Board believes that AMP has high-quality businesses with significant strategic value. The Board and management firmly believe in our existing strategy, including a repivot to private markets in AMP Capital and are confident that this will deliver long-term value for shareholders.
“However, we have taken a decisive step to undertake a portfolio review to ensure we appropriately assess all options to maximise shareholder value in a considered and disciplined manner.”
Summary
Asset sales may boost the share price in the short term, but I’m not sure AMP will get a great price under the current COVID-19 conditions. In my opinion, long term shareholders would probably be best served by waiting for the pandemic impacts to pass.
I don’t think AMP is a buy due to the long term nature of how long it may take to turn the business around. There are other ASX dividend shares I’d buy first like Macquarie Group Ltd (ASX: MQG) as a financial business. But Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) could be a reliable dividend pick.
