Old Mutual set to make £1bn AMP bid

OLD Mutual is poised to table a takeover bid of up to £1 billion for the UK assets of troubled Australian insurer AMP, including fund manager Henderson and life insurer Pearl.

A source close to Old Mutual said the insurance giant had completed its due diligence and had found nothing untoward. It was now considering making an offer.

The source said: 'They did not find any skeletons in the closet and the board is set to meet to decide its action.'

AMP said in May that it planned to demerge the UK business, which also includes insurers NPI and London Life, but its decision has flushed out potential buyers such as Old Mutual and private equity groups, including Kolhberg Kravis Roberts.

Details of the demerger were due to be released last week, but AMP has now delayed them until next month, blaming new rules on insurers' solvency issued by the Financial Services Authority.

AMP, which injected £500 million into Pearl last year so that it could meet its policy commitments, said it needed more time to work out the implications for its demerged businesses that would need to prove they could stand alone.

The issue could also be a stumbling block for potential buyers, though it could favour the deep pockets of Old Mutual against private equity groups, which might need to prove their financial strength to regulators.

Jim Sutcliffe, Old Mutual's chief executive, is keen to expand the company. He cast his eye over Lloyds TSB's Scottish Widows life insurance business, but the banking group is thought to be reluctant to sell.

AMP's British adventure has been expensive and the businesses have been a drain on the Australian operations. This has made AMP vulnerable to a takeover with National Australia Bank, said to be the most likely predator.