Pendal rejects Perpetual takeover bid, announces $100m buyback

Pendal Group CEO Nick Good

Pendal Group (ASX: PDL) has knocked back a $2.4 billion takeover bid from rival Perpetual (ASX: PPT) after the board announced today the proposal “significantly undervalues the current and future value” of the company.

The rejected offer would have seen the Sydney-based firm acquired for one PPT share for every 7.5 PDL shares plus $1.67 cash – representing an indicative value of $6.23 per PDL share based on the closing price on 1 April.

The board noted the offer only represented a 0.3 per cent premium to the 180-day volume-weighted average price of PDL shares up until then, determining it was "materially below" PDL's underlying standalone value. 

In an ASX announcement released today, the PDL board stood by the value of the company and said it “has some of the most respected investment talent in the world” alongside a “compelling global distribution footprint across the UK, Europe, the US and Australia”.

Upon dismissing the scrip-heavy bid, PDL also announced it would launch a $100 million buyback after the board found its shares are currently “undervalued”.

The company said it had a “strong cash-generating business with a solid balance sheet” that “provides significant flexibility to pursue growth and capital management initiatives for the benefit of shareholders.”

“The timing and number of shares purchased will depend on the prevailing share price, market conditions, ASX rules and other relevant factors,” Pendal said.

The buyback will be funded from a combination of cash reserves and financial assets and begin after the company releases its interim results in May.

Funds Under Management

Coinciding with the bid rejection was an update to Pendal’s funds under management (FUM) for the quarter ending 31 March, which fell from $135.7 billion to $124.9 billion in the span of four months.

Almost half of Pendal’s FUM is in the US ($57.2 billion), followed by Australia ($34.5 billion) and Europe, UK and Asia ($22.3 billion).

Pendal Group CEO Nick Good said the company is “pleased to have seen a significant improvement in flows despite weak and volatile markets that have impacted overall fund levels.”

“Our diversified book of businesses means we are well positioned to offer clients the range of investment strategies they require to meet their changing investment needs. We are also making solid progress on our multi-year investment program,”

“Pendal has some of the most respected investment talent in the world, a compelling global distribution footprint and a diversified product suite including a growing range of sustainable and impact solutions.”

“I have confidence our strategic priorities will deliver long-term organic growth.”

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