AMP LIMITED — Capital/Financing Update 2009

Dec 13, 2009

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ASX Announcement
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14 December 2009

Manager Manager Company Announcements Office Market Information Services Section Australian Securities Exchange New Zealand Stock Exchange Level 4, 20 Bridge Street Level 2, NZX Centre, 11 Cable Street Sydney NSW 2000 Wellington New Zealand

Announcement No: 66/09

AMP Limited (ASX/NZX: AMP) (also for release to AMP Group Finance Services Limited (ASX: AQNHA & NZX: AQN010))

Part One: AMP increases offer for AXA Asia Pacific and declares offer price best and final

Part Two: Investor information

AMP Limited (AMP) ASX Announcement AMP Limited Level 24, 33 Alfred Street Sydney NSW 2000 Australia

ABN 49 079 354 519

14 December 2009

AMP increases offer for AXA Asia Pacific and declares offer price best and final

AMP Limited announced today a revised joint proposal with AXA SA, offering an increased price for AXA Asia Pacific Holdings Limited (AXA AP) that equates to $6.22[1] per share, representing a 53[2] per cent premium on AXA AP’s closing share price on 5 November. This represents a 16 per cent improvement on the original proposal of 6 November 2009[3] .

The revised proposal was conveyed to AXA AP on 11 December 2009 and the independent directors of AXA AP have advised AMP and AXA SA that they are yet to reach a decision.

If the AXA AP independent directors do not accept and recommend the revised proposal to minority shareholders and AXA AP does not execute legal documentation by 21 December 2009, AMP and AXA SA will regard the AXA AP independent directors as having rejected the proposal and it will lapse. The proposal is conditional on satisfactory reciprocal due diligence and AXA AP minority shareholder, court and regulatory approvals.

The revised proposal comprises a fixed cash component of A$1.92 and 0.6896 AMP shares per AXA AP share. AXA AP shareholders would also receive AXA AP’s 2009 final dividend of up to 9.25 cents per share, subject to AXA AP having an appropriate level of capital reserves at the time.

The revised offer price which equates to A$6.22 reflects an increase in the cash component and an increase in AMP’s share price since 5 November 2009. The revised offer price has been declared best and final by both AMP and AXA SA. The total number of AMP shares and the total amount of cash (including the dividend) will not be increased[4] .

AMP Chairman Peter Mason said: “We are offering AXA AP minority shareholders improved value and greater certainty. Shareholders will have the opportunity to realise some immediate value in cash and also to participate in the value created by combining the two businesses.

“AXA AP minority shareholders would have a 24 per cent ownership in AMP which has typically delivered a higher dividend yield and better franking rate than AXA AP shares.

“The revised proposal addresses the significant matters raised by the independent directors in their rejection of the original proposal and we urge them to recommend this substantially improved offer to minority shareholders,” Mr Mason said.

AMP Chief Executive Officer Craig Dunn said: “The transaction would deliver significant value to both AXA AP and AMP shareholders and create a larger, more competitive home grown wealth management company focused on growing its business through meeting the needs of Australian and New Zealand customers.

“This acquisition would give the merged entity significant scale and efficiency in core markets, broaden its advice footprint and distribution, and create the fifth pillar in a new financial services landscape.

1 Based on AMP’s volume weighted average share price (VWAP) since the original proposal was announced on 9 November 2009 of A$6.24. 2 Based on the implied revised offer price of A$6.22 and AXA AP’s closing share price of A$4.08 on 5 November 2009. 3 Which equated to an offer price of A$5.34 based on AMP’s share price of A$5.75 on 5 November 2009. 4 Assuming 2,067.1 million AXA AP shares on issue.

“Australia is one of the world’s fastest growing and most attractive wealth management markets and the merged business would hold number one market rankings in risk insurance, superannuation and retirement incomes,” Mr Dunn said.

The key points of the revised proposal are:

• AXA AP minority shareholders are being offered consideration which equates to A$6.22 per share, comprising A$1.92 per share in cash and 0.6896 AMP shares for each AXA AP share.

• The cash component has been increased by A$515 million (A$0.54 per share), with AMP contributing an additional A$100 million and AXA SA contributing an additional A$415 million.

• 31 per cent of the total consideration[5] would be in cash and the cash consideration will be fixed in A$ removing any foreign exchange uncertainty.

• A mix and match facility would be offered to AXA AP minority shareholders enabling them to elect a greater portion of their consideration in cash or AMP shares, subject to the total maximum pool of cash and AMP shares made available under the revised proposal.

• AXA AP shareholders would also receive AXA AP’s 2009 final dividend of up to 9.25 cents per share subject to AXA AP having an appropriate level of capital reserves at the time.

• AMP would acquire the Australian and New Zealand assets of AXA AP on an ungeared basis for A$4.4 billion[6] .

• AMP would contribute 657 million AMP shares and A$315 million in cash towards the overall consideration being offered to AXA AP minority shareholders.

• The transaction would remain marginally EPS accretive to AMP shareholders in the second full year after acquisition and represents a price to earnings multiple of 18.6 times[7] . The EPS accretion assumes post tax synergies of A$120 million per year and integration costs of $285 million post tax.

• AXA SA would acquire AXA AP’s Asian business for A$9.6 billion including A$501 million of debt.

• AXA SA would fully subscribe or underwrite to A$600 million subordinated debt issued by AMP, which would qualify as AMP Tier 2 regulatory capital.

• AMP would remain strongly capitalised following the transaction.

• AMP would invite two AXA AP directors to join the AMP Board.

“It’s important for Australian consumers to have stronger competition in the financial services sector, which a larger non-bank wealth manager would provide. This acquisition would strengthen AMP’s competitive position and provide greater consumer choice.

5 Based on AMP’s volume weighted average share price (VWAP) since the original proposal was announced on 9 November 2009 of A$6.24.

6 Based on AMP’s volume weighted average share price (VWAP) since the original proposal was announced on 9 November 2009 of A$6.24.

7 Based on a purchase price of A$4.4 billion and assumes that FY2010 operating earnings and investment income of the Australian and New Zealand businesses of AXA AP will be A$261m which is the average of the eight analyst forecasts for those earnings and that income published since 1 December 2009 (post AXA AP’s strategy briefing) which ranged from A$180m to A$233m for operating earnings and A$57m to A$60m for investment incomes, with an estimated A$24m in corporate office overlay assumed to relate to the Australian and New Zealand businesses.

“By combining the two businesses we would build a stronger stand-alone wealth management company with a specialist focus on ensuring consumers have access to quality financial advice,” Mr Dunn said.

Media enquiries Jane Anderson +61 2 9257 9870 +61 402 967 791

Investor enquiries Howard Marks +61 2 9257 7109 +61 402 438 019

Sarah Hudson +61 2 9257 2700 +61 424 034 059

Stuart Kingham +61 2 9257 5207 +61 401 139 067

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