Perpetual ups ante with revised Trust bid
Trust Co's decision to support Perpetual's improved $227 million bid left rival suitors IOOF and Equity Trustees considering their options. But Deutsche Bank analyst Kieren Chidgey said there was only a 50 per cent chance Perpetual's latest offer would close the deal.
Just days after backing an offer by wealth management company IOOF, Trust Co on Monday said its board had "unanimously recommended that its shareholders vote in favour of the revised Perpetual proposal in the absence of a superior proposal, subject to an independent expert opining that the scheme is in the best interests of shareholders".
Trust Co directors would also vote their shares in favour of the offer, subject to those conditions, which include approval from the competition regulator.
The news pushed Trust Co shares to a five-year high of $7.10. The shares have risen 62 per cent so far this year, as three companies vie to take it over. The company provides trustee and related services to corporate and individual clients, as well as investment and wealth management advice.
Equity Trustees, which began the bidding war with a scrip-only bid in February, has yet to respond to Trust Co's announcement.
IOOF said on Monday it was looking at Perpetual's agreement.
The new Perpetual offer is 0.182 Perpetual shares for each Trust Co share. Alternatively, shareholders who choose to receive cash will receive 0.182 Perpetual shares for each Trust Co share, or a value of $6.29 per Trust shares, whichever is greater. The cash is capped at $110 million.
The Perpetual offer is subject to approval from the Australian Competition and Consumer Commission, which has previously noted that the purchase might "raise competition concerns in relation to certain corporate trust services" and that the two companies were both "strong providers of particular types of custody services".
Perpetual said it had "worked closely with the regulator and looks forward to the completion of [its] review" on September 19.
IOOF has promoted its bid as being more likely to be cleared by the ACCC than Perpetual's offer.
Baillieu Holst analyst Nick Burgess said he expected IOOF to "look at this revised offer and respond".
Mr Chidgey said Perpetual's offer - valued at $7.18 a share, including dividends - would make a positive impact on profit by the third year.
Frequently Asked Questions about this Article…
Perpetual’s revised offer gives Trust Co shareholders 0.182 Perpetual shares for each Trust Co share. Alternatively, shareholders can choose a cash option that effectively provides 0.182 Perpetual shares or a value of $6.29 per Trust Co share, whichever is greater. The cash component is capped at $110 million.
Trust Co’s board unanimously recommended shareholders vote for Perpetual’s revised proposal provided there is no superior proposal. That recommendation is conditional on an independent expert concluding the scheme is in shareholders’ best interests and on approval from the competition regulator.
Deutsche Bank analyst Kieren Chidgey estimated there was about a 50% chance Perpetual’s latest offer would close. The outcome remains uncertain because rival bidders and regulatory approval are still factors in the process.
The offer is subject to approval from the Australian Competition and Consumer Commission (ACCC). The ACCC has previously said the purchase might raise competition concerns in relation to certain corporate trust services because both companies are strong providers of particular custody services. Perpetual said it has worked closely with the regulator and expects the review to complete on September 19.
News of Trust Co backing Perpetual’s revised bid pushed Trust Co shares to a five-year high of $7.10. The shares have risen about 62% this year as three companies have vied to take the firm over.
Equity Trustees began the bidding war with a scrip-only bid in February but had not responded to Trust Co’s announcement. IOOF recently had been backing an offer and said it was reviewing Perpetual’s agreement; IOOF has promoted its bid as potentially more likely to be cleared by the ACCC. Analysts expect IOOF to consider and possibly respond to Perpetual’s revised offer.
Analysts valued Perpetual’s offer at about $7.18 per Trust Co share when including dividends. Deutsche Bank’s Kieren Chidgey said the acquisition would be expected to make a positive impact on Perpetual’s profit by the third year.
Investors should monitor whether a superior proposal emerges, the independent expert’s opinion, and the ACCC’s review outcome. Also watch any responses from IOOF and Equity Trustees, the cash cap of $110 million, and how these developments affect Trust Co’s share price and Perpetual’s stated timeline for regulatory review.
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