small chance, but lets hope sno is a target

AMP looking out for local takeover opportunities

David McIntyre | August 20, 2009
Article from: Australian Associated Press
AMP IS looking out for Australian superannuation and investment platform businesses to buy, ahead of an expected return in investor confidence.

Shares in AMP gained more 3 per cent after the nation's biggest superannuation provider reported a 16 per cent fall in first half underlying profit, which was better than analysts' expectations.

Chief executive Craig Dunn said that any acquisitions had to be economic for AMP, which meant buying a company at a discount to AMP's value, and deliver cost savings upon merging the operations.

"To deliver an acquisition that's economic (depends on) the relative cost of capital of the company versus your own and then you have to take advantage of synergies,'' Mr Dunn said.

"Synergies are more likely to be large and economic if we're buying domestically, because the bulk of our operations are in Australia, and if we're buying life businesses.

"The synergies you can get from a standalone life insurance business aren't the same as if you bought a superannuation or platform business.''

AMP recently lost out in the race to buy UK-owned life insurer Aviva Australia Holdings, which NAB acquired for $825 million in June.

But Mr Dunn said AMP didn't have to make takeovers to grow its business as the company was investing in internal growth initiatives, including training new planners.

He also said the company would raise new equity from shareholders to fund any acquisitions.

AMP shares rose 3.76 per cent to $6.07 at 2.19pm (AEST). The stock closed at $6.13 on August 14, the highest since October 2008.

AMP's underlying profit, the company's preferred measure because it excludes the effects of market volatility, fell to $367 million in the half year ended June 30 from $437 million last year, as investment markets declined due to the global financial crisis.

But the outcome was better than the consensus analyst forecast for about $275 million.

Bottom line net profit dipped one per cent to $362 million. While slumping markets had hurt AMP during calendar 2009 first half, mainly due to lower fee income, total funds under management remained steady at about $104 billion, instead of falling as was the case in the two preceding halves.

"The short term outlook is starting to look positive,'' Mr Dunn said.

He said a recent rally equity markets was sustainable, although the market "may have gotten ahead of itself.''

Mr Dunn added that retail investors were still nervous and it would be a while yet before they would begin to invest again in growth assets. AMP's costs were down 7 per cent compared to last year.

AMP declared an interim dividend of 14 cents a share, 50 per cent franked, compared with 22 cents the year. This represented a pay-out ratio of 77 per cent of underlying profit, within the company's target range.

http://www.theaustralian.news.com.au/business/story/0,28124,25956715-36418,00.html