Perpetual Ltd has rejected an unwanted $1.68 billion takeover offer from a consortium comprising Baring Private Equity Asia and Regal Partners.
Perpetual said the conditional, non-binding indicative $30-per-share proposal “materially undervalued it” and added that it was committed to progressing with its own $2.51 billion acquisition of rival Pendal Group announced in August.
“This offer is uncertain and conditional and the Perpetual board believes that it is not in the best interests of its shareholders to engage on this offer and has therefore rejected the offer,” Perpetual said in Thursday’s statement to the ASX.
The news saw Perpetual shares rise 7% to $28.82, well short of the $30 a share offer, which was hardly a knock out price seeing Perpetual shares were at that level only in September.
The shares hit an early high of $29.62 and then sagged when the Perpetual knock back emerged.
The fact that the price didn’t get to the $30 level tells us that the market is not really enthused and thinks this bid will not go anywhere unless it is much higher. It also suggests there’s no other likely bidder out there, even though several anonymous analysts have been trying to drum up a counter offer by telling Perpetual that it should be looking for other suitors.
It’s an attempt to get Perpetual on the cheap and before the Pendal deal closes and makes the combined company too expensive.
The consortium that made the offer includes Baring Private Equity Asia, which was recently acquired by global private equity firm EQT. Baring made the bid through the BPEA Private Equity Fund VIII.
And there’s ASX-listed investment manager Regal Partners, run by CEO Brendan O’Connor and chief investment officer Phil King, recently merged with VGI Partners.
In a statement yesterday, O’Connor claimed the offer was a “compelling opportunity for our shareholders to create a leading ASX-listed provider of active investment strategies globally”.
“We believe the proposal we have submitted is compelling for Perpetual shareholders and, importantly, is more attractive than maintaining the status quo and proceeding with the proposed acquisition of Pendal,” he said.
Perpetual and Pendal announced a higher, $2.7 billion offer several months after Pendal’s board rejected a previous $2.4 billion offer in April as too low.
Regal Partners claimed its offer was more compelling than the latest Pendal offer as the terms of the proposed acquisition by Perpetual of Pendal “were agreed some time ago and are not reflective of current market conditions and valuations of asset managers which have deteriorated since that time.”
“An acquisition of Pendal by Perpetual today would be at a lower value were it to reflect the movement in market conditions and valuations since the time of that agreement,” the company said
Regal is seeking to acquire the asset management businesses of Perpetual, while BPEA EQT will seek to acquire the corporate trust and private client businesses.
Perpetual has been under pressure for a year or more to sell or spin off the latter with private equity groups leading the push to prise the business out of the company.
Regal said that it was disappointed the proposal had been rejected, but it will seek to understand the rationale behind the decision and engage with Perpetual’s concerns.
Co-incidentally, Macquarie Group emerged as a substantial shareholder in Perpetual in an ASX filing timed well after trading ended at 4.51pm. Macquarie said it had 3.007 million shares, or a 5.25% stake.
