Australian insurer AMP has made a cash offer for UK online financial information firm III.
UK online financial information group III (Interactive Investor International) on Monday confirmed that Australian insurer AMP has tabled an offer for the company. The company said the offer was at a small premium to its cash holding of $71 million. This represents a major increase on III’s market value of $50 million on June 29.
The potential sale comes as little surprise. III warned earlier this year that it was facing a difficult market. The warning was reinforced by last week’s death of rival site Marketeye.com after parent company Thomson decided it was both non-core and impractical to sell.
Unlike Marketeye, III has managed to leverage its customer base to sell financial services products. Its alliance with financial planning consultants Towry Law has helped it turn browsers into buyers, at least to an extent.
But it still isn’t enough. III isn’t making a profit, and isn’t likely to do so for some time. Particularly in a bear market, online investor information is a viable business model only if it can be used to draw customers into a full-service advisory business, which offers online and offline access and charges real fees.
AMP’s acquisition of Towry Law last week seems to be the catalyst for the deal, but the site fits in with AMP’s other UK operations as well. The Australian firm already offers a retirement planning website in the UK, called Ample, which is run by III’s former managing director. Adding III to the portfolio will boost Ample – and AMP’s profile in the UK in general – significantly. The III site has 1.2 million registered users, as well as a strong technology offering.
The Australian firm seems to be making a wise move, building its brand and customer base in the UK and creating major cross-selling opportunities at a knockdown price. However, it’s less than encouraging news for online financial advice groups. If one of the strongest-looking services can’t survive independently, the prospects for its rivals are unlikely to be terribly good either.
