AMP and Dexus provide update on Collimate Capital sale

AMP and Dexus have advised of a revised transaction structure with regards to the sale of Collimate Capital to be contemplated and pursued alongside the existing transaction which has seen uncertainty around an ‘outstanding condition precedent’.

This related to the transfer of AMP’s ownership interest in China Life AMP Asset Management (CLAMP) from entities being acquired by Dexus to AMP prior to completion of the transaction which required receiving approval from the applicable regulator in China.

In the announcement made to the Australian Securities Exchange (ASX), AMP said that there was “uncertainty around achieving this date” and both parties agreed to extend the date for satisfaction or waiver of conditions precedent to 28 February, 2023 as under the original terms of the sale agreement with Dexus. Each party had the right to terminate the agreement from 27 January 2023 if all conditions precedent were not satisfied by this date.

But if the conditions precedent were not satisfied or waived by 26 January 2023, this would result in a significant purchase price reduction (the maximum total consideration payable by Dexus)  to $225 million, including:

• the base purchase price to be reduced by $25 million to $225 million, and
• the remaining potential earn out amount (approximately $26 million) to be forfeited.

At the same time, Dexus and AMP advised they were engaged in discussions regarding an alternative transaction structure that would allow the staff and the business to move across to Dexus without CLAMP being transferred ahead of completion.

The two parties entered into a non-binding term sheet with contemplated a revised transaction structure with a two-stage completion process which would allow for most legal entities (holding the majority of the Collimate Capital domestic assets and management rights) as well as employees, to transfer to Dexus at first completion, and prior to the satisfaction of the remaining condition precedent and by March 2023.

Following this, the transfer of one remaining entity (which currently holds the interest in CLAMP) would occur at final completion following receipt of the necessary regulatory approval.

In their notes to the ASX both AMP and Dexus confirmed that the alternative approach was pursued alongside completion requirements for the existing transaction.

Dexus first announced its acquisition of AMP’s Collimate Capital real estate and domestic infrastructure equity business in April last year in a transaction involving a $250 million upfront cash payment and earn out consideration of up to $300 million, subject to “a range of factors including successful transition of assets under management”.