Gina’s rivals bow out of Kidman bid
GINA Rinehart will almost certainly take control of the S. Kidman & Co pastoral empire after the withdrawal of a rival bid from four wealthy farming families.
The decision by the Buntine, Brinkworth, Harris and Oldfield families came after the Kidman board yesterday unanimously recommended shareholders accept an improved offer from the consortium led by Mrs Rinehart.
Her company, Hancock Prospecting, and Chinese group Shanghai Cred lifted their offer to $386.5 million on Thursday.
The rival syndicate was considering lobbing a higher offer but yesterday decided not to get into a bidding war with the mining magnate.
In a statement, the syndicate said it had withdrawn following the Kidman board’s recommendation yesterday.
“We are disciplined investors in Australian rural assets and made what we believed to be a full and fair offer,” the statement said. “After what has been a lengthy and complex sales process we congratulate the Hancock Shanghai Cred consortium for similarly recognising the potential of the iconic Kidman brand.” AMP has suffered its biggest market rout in more than three years after chief executive Craig Meller warned there had been a “constant deterioration” in the insurance sector this year.
Shares in the group tumbled 9.1 per cent in the wake of the revelation yesterday, wiping $1.4 billion from its market value.
It came after AMP flagged plans to write down $668 million from the value of its life insurance business because of bleak conditions buffeting the market.
Australia’s oldest life insurer also revealed it expected a $565 million hit to earnings this year as declining profitability in life insurance took a toll.
Mr Meller said the insurance market was changing and the company had to reassess the value of its life insurance division, called “wealth protection”. The changes would “reset” the business, he said, improving earnings stability across the group, freeing up capital and helping “bring into focus the growth potential of AMP”.
“The challenges AMP has faced in its Australian wealth protection business over the last three years have been accentuated in 2016 by deteriorating experience across the life insurance sector,” Mr Meller said.
AMP had “come to the view that the current trends are structural in nature”, he said. “We’ve seen consistent deterioration in the insurance sector over the course of 2016 and, despite the progress on claims transformation to date, it has significantly impacted the performance of our wealth protection business.”
The business had suffered a $44 million loss in the past quarter, he said.
Mr Meller said the $668 million writedown to the value of goodwill in the division was likely with the group’s full-year results, due next February.
“This reflects a decline in the potential recoverable amount for the Australian wealth protection business in line with reductions in embedded value,” he said.
The slump in the group’s share price yesterday – down 47¢ to $4.68 – was the deepest for any day since June 2012.