The battle for Trust Co is now reaching seven months and three suitors, with IOOF the latest to throw its hat in the ring for the small-cap financial services firm.
IOOF chief executive Chris Kelaher told BusinessDay it behoved the Trust Co board to accept its "clearly superior" offer "sooner rather than later."
It has offered guaranteed cash of $6.03 for each Trust Co share, plus a 22¢ dividend, or 0.74 IOOF shares per Trust Co share. The guaranteed cash consideration is capped at $100 million.
Mr Kelaher said Trust Co offered an attractive path into fast-growing sectors such as self-managed superannuation, philanthropy and KiwiSaver in New Zealand.
But Equity Trustees, the party that put Trust Co in play in February, remains hopeful that it will be able to seal the deal, and said the "option of looking at our bid [to include a cash component] remains open".
Meanwhile, financial services giant Perpetual will hear the Australian Competition and Consumer Commission's verdict on its bid by September 19. Perpetual has three business days in which to respond if Trust Co decides that IOOF's offer is superior.
News of the three-way tussle put a rocket under Trust Co's share price, with its shares soaring 12.8 per cent on Tuesday to close at $6.54.
Baillieu Holst analyst Nick Burgess said: "The situation remains fluid and the ultimate successful bidder is difficult to determine."
Excluding synergies, Mr Burgess valued the Equity Trustees bid at $5.93 a share, Perpetual's at $6.16 and IOOF's at $6.34 cash or $6.64 in shares. But taking synergies into account, Mr Burgess said Equity Trustees offered Trust Co shareholders "the most long-term upside in theory".
"That said, the lack of a cash component and the lower headline value on a pre-synergies basis are practical barriers for Equity Trustees," he told clients. "IOOF's position, with a higher bid than Perpetual, no ACCC concerns, as well as a proven, long-term track record of adding value through acquisitions looks strong at this stage."
IOOF has flagged synergies of $14 million in annual pre-tax synergies. Accounting firm Ernst & Young found in July that $14 million of synergies claimed by Perpetual "were supportable", compared with $7.5 million for Equity Trustees.
Deutsche Bank analyst Kieren Chidgey estimated there was a 50 per cent chance that Perpetual would succeed in nabbing Trust Co, by offering a 10 per cent premium to IOOF's offer, or about $7.22 a share. Even that sweetened offer would be 6 to 7 per cent earnings a share share accretive by 2016, he said.
Equity Trustees chief executive Robin Burns told BusinessDay that its offer provided Trust Co shareholders with a 60 per cent stake in the combined company, as opposed to the very small stake in a large company provided by Perpetual and IOOF's offer, and would ensure continuity in identity and relationships.
Questioned whether Equity Trustees would consider offering a cash component to its bid, he said: "The option of looking at our bid remains open."
Trust Co shares are up 49 per cent this year, taking its market capitalisation to $220 million.