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Investment fund Perpetual (ASX: PPT) has jumped at the opportunity to take over weakened competitor Pendal Group (ASX: PDL) in a $2.4 billion cash and scrip deal that would see the latter’s shareholders own 48 per cent of the merged entity.
In an ASX trading update today, PDL announced it had received a non-binding proposal to be acquired for an indicative price of $6.23 per share – the majority comprising one PPT share for every 7.5 PDL share plus $1.67 cash.
While the offer reflects a premium of 39.2 per cent to PDL’s closing share price, the company was trading at $6.95 just four months ago.
Although PPT has seen its share price drop by 10 per cent over the last six months, PDL has been hit hardest of the two - dropping by 33 per cent over the same period and reaching a 52-week low of $4.04 per share last month.
As the bid saw PDL shares surge by 24 per cent to $5.56 this morning, PPT entered a trading halt and its shares are down 6.5 per cent at the time of writing at just over $32.
The PDL board notes the proposal has been made at a time “when significant geopolitical instability, the economic impacts of the ongoing COVID-19 pandemic and broader market volatility” have disrupted the global markets the firm operates in.
“This has materially impacted the trading values of global asset managers which may not currently reflect their long-term potential to deliver attractive returns to investors,” Pendal said in today’s ASX announcement.
In response to the announcement, Perpetual said the possible takeover would combine “two highly complementary businesses” and “create a leading global asset manager”.
“The combined group will be well placed to grow its asset management businesses across all key markets and channels, gain improved leverage and scalability across a unified business platform, delivering high-quality client service, greater innovation, whilst meaningfully enhancing the growth profile of both companies,” PPT said in an ASX announcement released today.
Global investment giant Goldman Sachs is acting as a financial advisor for PPT, while London-based firm Herbert Smith Freehills is providing legal assistance.
“The proposal aligns with Perpetual’s strategy to grow its business globally and is strategically and financially compelling, with an initial estimate of approximately $50 million of run-rate pre-tax annual cost synergies expected (subject to due diligence), creating a clear leader in the Australian asset management market.”
“Perpetual remains focused on executing its stated growth strategy. This includes evaluating various opportunities consistent with its strategy of acquiring complementary capabilities to position it well for future growth, and which are accretive to shareholder value."
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