Perpetual and Pendal agree to new takeover deal

Fund manager Perpetual has struck a new deal in its plan to buy out rival Pendal, with the acquirer cutting the cash component of its offer.

The changes in the deal structure come after the planned merger was interrupted this month when hedge fund Regal launched a separate bid to buy Perpetual, sparking a legal dispute over whether Perpetual could delay the merger. Trading in Perpetual shares was paused on Thursday morning following a court ruling on this issue.

There has been market scepticism about the merits of the deal for Perpetual shareholders, following a fall in Perpetual’s share price since the tie-up was announced in August. On Thursday, the two companies’ boards said they had agreed to revised terms that will mean the combined group has less leverage.

“The Revised Terms further strengthen the balance sheet and enhance the financial flexibility for the combined group. Perpetual will retain majority ownership of the combined group and the transaction is expected to remain double-digit [earnings per share] EPS accretive to Perpetual shareholders in the first twelve months post completion,” Perpetual said in a statement.

Under the changes, Pendal shareholders will receive $1.65 in cash and one newly issued Perpetual share for every seven Pendal shares. Previously Perpetual was offering $1.976 a share in cash, and one Perpetual share for every 7.5 Pendal shares.

Pendal chairman Deborah Page said: “The Board believes the Revised Consideration Mix is appropriate and for the benefit of shareholders in the combined group. We look forward to continuing to progress the Scheme towards implementation.”

Both companies are expected to update the market on the outcome of a court battle on whether Perpetual could potentially walk away from the Pendal deal.

More to come

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