Perpetual (ASX:PPT) has rejected Washington H. Soul Pattinson's (ASX:SOL) all-paper offer, which includes no cash.
"The Board, together with its advisers, carefully considered the Indicative Proposal and unanimously determined that it is not in the best interests of its shareholders. Therefore, it has rejected it on the same confidential basis as it was provided to Perpetual," Perpetual said in a statement to the ASX.
Perpetual confirmed that "confidential discussions took place" with Soul Pattinson and that the Indicative Proposal was rejected for the following reasons:
It materially undervalues Perpetual and its Corporate Trust and Wealth Management businesses and offers WHSP shares as consideration.
It is conditional on a demerger of Asset Management, which would be distributed in-specie to existing Perpetual shareholders.
It introduces significant execution and operational risk over a protracted implementation period, which may have negative value implications for Perpetual shareholders.
Perpetual stated it has "three high-quality, unique businesses that have attracted market interest from time to time." The company also believes there is merit in exploring the separation of its businesses as part of a strategic review and remains focused on exploring options to maximise shareholder value.
Soul Pattinson's statement about its $3.1 billion bid came only hours after Perpetual released its statement about its strategic review, leading investors to believe that Soul Pattinson had attempted to influence market sentiment about Perpetual.
Soul Pattinson is not offering any cash, only just over $1 billion worth of its shares, with Perpetual shareholders to get an in-specie distribution of the asset management company (which Soul Pattinson doesn't want).
Perpetual shares last sold on Tuesday at $22.42 and rose more than 6% on Wednesday to end at $23.76.
Soul Pattinson had more than $900 million in cash on hand at the end of its September financial year and enormous borrowing capacity, making it capable of funding a cash component for any serious offer.
