Analysts say the outcome in the takeover battle for small-cap financial services company Trust Co remains uncertain, despite it backing a sweetened bid from wealth management company Perpetual.
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.