Perpetual Ltd chose its moment to pounce on Pendal with clinical precision. It was Friday after the market closed that Pendal chairman Deborah Page received notification from Perpetual chairman Tony D’Aloisio of a $2.4 billion takeover offer.
It is nothing short of cunning to bid for a company whose chairman has been in the job for only a few months and whose chief executive, Nick Good, has been stuck in the US, thanks to COVID, since he took over the top job last year. It is also opportunistic to make an offer during a European conflict that has upended equity markets and damaged the valuations of asset management businesses worldwide.
Both companies’ share prices have been damaged, but Pendal’s have been far more wounded and Perpetual has seized on that valuation advantage.
Perpetual chairman Tony D’Aloisio chose his moment to pounce.Credit:Steven Siewert
Pendal’s blindsided board spent the weekend formulating their response – which noted the offer and made no recommendation to shareholders. Unofficially it is highly unlikely that Pendal will acquiesce to Perpetual at this price.
A more plausible response is that it’s game on. Two lines in Pendal’s response in a statement on Monday provide telling clues.
Firstly, Pendal notes that the takeover premium being offered by Perpetual is next to nothing – if one considers Pendal’s volume weighted average price over 180 days. This certainly feels like code for – you’re trying to get us on the cheap. (The offer premium over last Friday’s closing price is a far more respectable 39 per cent.)
The second hint is in the line saying, “The proposal has been put forward at a time when significant geopolitical instability, the economic impacts of the ongoing COVID pandemic and broader market volatility has disrupted the global markets in which Pendal operates”.
Valuing this indicative offer, made via a scheme of arrangement, for which the consideration is largely scrip with a bit of a cash kicker, isn’t simple. If the offer was successful Pendal shareholders would own 48 per cent of the merged company.
Thus, Pendal shareholders will need to assess Perpetual value – its earnings, dividends and growth prospects.
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