Perpetual rejects improved bid from Regal consortium valued at $2.1 billion

Perpetual rejects improved bid from Regal consortium valued at $2.1 billion

Regal Funds CEO and managing director Brendan O'Connor

Australian investment fund Perpetual Limited (ASX: PPT) has once again knocked back a takeover bid from a consortium comprised of Regal Partners (ASX: RPL) and private equity firm BPEA EQT.

The latest bid, which values Perpetual Limited at approximately $2.1 billion - nearly $400 million more than the company’s most recent market capitalisation - is not in the best interests of the firm’s shareholders according to the target.

It comes one week after Regal and BPEA Private Equity Fund VIII lobbed a $1.7 billion bid to acquire Perpetual, which was also rejected on similar grounds. That deal would have seen the consortium acquire all shares for $30 cash, while the latest offer was $33 cash per share.

“Perpetual’s Board has considered a number of factors, including value, high conditionality, transaction and execution risks, in determining that the Consortium’s Revised Indicative Proposal is not in the best interests of its shareholders and has therefore rejected the offer,” Perpetual said.

“Perpetual’s Board advises shareholders to take no action at this time. Perpetual will keep shareholders informed in accordance with its continuous disclosure obligations.”

Regal Partners has described the latest rebuff as ‘disappointing’, with the investment manager insisting the deal is compelling.

It comes amid another ongoing takeover process led by Perpetual, with the firm in the midst of acquiring global investment manager Pendal Group (ASX: PDL).

Regal CEO and managing director Brendan O’Connor said the improved proposal was structured to enable Perpetual to progress discussions with the consortium in parallel with the Pendal transaction.

“We firmly believe the Improved proposal creates significantly more value for Perpetual’s shareholders as compared to the Pendal Transaction, requiring only limited engagement to progress the improved proposal so as to maximise the chance of delivering a superior outcome for Perpetual shareholders, clients and employees at limited cost to the Perpetual board and management’s time,” O’Connor said.

“The Consortium is confident that there is no impediment to Perpetual engaging with the Consortium.

“We consider that doing so, as part of a short and expedited due diligence process, would have delivered a strongly preferred outcome for Perpetual shareholders.”

Meanwhile, Perpetual’s target Pendal remains in the midst of this commotion, and has told shareholders that it will go ahead with court hearings into the transaction despite requests from Perpetual to have it delayed.

“Pendal wishes to update its shareholders and the market that despite requests by Perpetual for a delay, it intends to proceed to the first court hearing for the Scheme this week and to seek orders convening the scheme meeting and for despatch of the scheme booklet to shareholders, with a scheme meeting to occur in mid-December 2022,” Pendal said.

“Pendal notes that while the scheme implementation deed permits Perpetual to engage with another proposal, it does not permit Perpetual to terminate or otherwise abandon the scheme in order to pursue a proposal.

“For clarity, the deed does not preclude Perpetual responding to a proposal, but any resulting transaction can only be implemented in circumstances where the scheme is accommodated. Any speculation to the contrary is inaccurate and contrary to a certain and well-functioning market for corporate control.”

Shares in Perpetual are up 6.50 per cent to $30.98 per share at 11.38am AEDT.

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