{"id":43916,"date":"2023-12-06T07:19:02","date_gmt":"2023-12-06T07:19:02","guid":{"rendered":"https:\/\/cabanesetcompagnie.com\/?p=43916"},"modified":"2023-12-06T07:19:02","modified_gmt":"2023-12-06T07:19:02","slug":"soul-pattinson-in-3-billion-bid-for-perpetual-as-split-on-the-cards","status":"publish","type":"post","link":"https:\/\/cabanesetcompagnie.com\/world-news\/soul-pattinson-in-3-billion-bid-for-perpetual-as-split-on-the-cards\/","title":{"rendered":"Soul Pattinson in $3 billion bid for Perpetual as split on the cards"},"content":{"rendered":"

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Fund manager Perpetual has received a $3 billion takeover bid from its biggest shareholder as it weighs whether to dissolve its three-pronged corporate structure and focus on its flagship asset management business to boost shareholder returns.<\/p>\n

On Wednesday, diversified investment house Washington H. Soul Pattinson (WHSP) announced to the ASX it had lobbed a non-binding, indicative offer on November 21 that would bring its 9.9 per cent stake in Perpetual to 100 per cent.<\/p>\n

<\/p>\n

Rob Adams, chief executive of Perpetual, which has been under pressure to generate value for investors.<\/span>Credit: <\/span>Brook Mitchell<\/cite><\/p>\n

WHSP\u2019s proposal values Perpetual shares at $27 each, nearly 29 per cent above the fund manager\u2019s closing share price in the week before the offer was made. The bid is about 14 per cent higher than Perpetual\u2019s closing share price on Wednesday, just before WSHP\u2019s announcement.<\/p>\n

The offer comes as Perpetual said in a statement to the ASX earlier the same day that it would explore the benefits of splitting off its corporate trust and wealth management divisions to create a more focused, pure-play asset management business.<\/p>\n

\u201cThe review is being progressed by Perpetual\u2019s board of directors and is in line with the company\u2019s regular evaluation of opportunities to create value for shareholders,\u201d it said.<\/p>\n

At its annual general meeting on October 19, Perpetual told investors its growth strategy had provided the company with \u201cthree quality businesses of scale, which enabled the board to assess additional strategic options that may arise, to maximise value for our shareholders\u201d, it said in the announcement.<\/p>\n

WHSP said in its announcement that it welcomed Perpetual\u2019s exploration of a potential separation of its corporate trust and wealth management businesses from its asset management business.<\/p>\n

Under WHSP\u2019s proposal, Perpetual shareholders would receive WHSP shares in exchange for the Perpetual\u2019s wealth management and corporate trust businesses, while holding on to shares in a separately listed Perpetual asset management business.<\/p>\n

\u201cA singular management focus on Perpetual Asset Management positions the business to deliver growth in the global asset management sector, and to benefit from annualised synergies of the Pendal integration without the burden of leverage,\u201d WHSP said in its announcement.<\/p>\n

Morgan Stanley analyst Andrei Stadnik said Perpetual\u2019s review could contribute to a roughly 25 per cent upside for the stock. \u201cThe corporate trust division in particular has attracted interest from private equity in the past,\u201d he said. \u201cWe think the asset manager may be undervalued by the market.\u201d<\/p>\n

However, Stadnik said there could be tax implications to consider and varying views on how to reallocate the corporate overhead costs. \u201cA demerger could be simpler from a gains-on-sale-tax perspective,\u201d he said.<\/p>\n

WHSP said its indicative offer provided an opportunity for Perpetual shareholders to \u201cunlock value in a tax efficient structure\u201d while retaining exposure to each of Perpetual\u2019s three businesses.<\/p>\n

JP Morgan analyst Siddarth Parameswaran said Perpetual may look at spinning off the corporate trust and wealth management business with a possible partial sale for the right price.<\/p>\n

\u201cBoth the corporate trust and wealth management divisions are quality businesses with good growth records and scale and command a higher multiple than the asset management business,\u201d he said, adding the sale of corporate trust and wealth management businesses could help crystallise value for shareholders. \u201cWhat will be important to look out on is how much the separation costs could be and if there will be any dis-synergies.\u201d<\/p>\n

Several companies have made a bid for the fund manager over the years including private equity and hedge fund Regal which lobbed two offers at the company last year.<\/p>\n

Morningstar analyst Shaun Ler said while Perpetual\u2019s corporate trust business could be relatively cleanly separated from the other divisions, there was some entanglement between the asset management and wealth management businesses which could make a split more complex.<\/p>\n

However, Ler said the company had been under pressure to generate value for some time and that asset managers were increasingly consolidating amid a challenging environment.<\/p>\n

\u201cAsset managers around the world have been under pressure, and as a result, a lot of them have seen their stock prices trading at quite depressed levels,\u201d he said. \u201cThe common trend right now is consolidation.\u201d<\/p>\n

Ler said the market was failing to realise the value of the business and that the firm was exploring an avenue to expedite value creation for its shareholders, but that the benefit of the change would lie in the price paid for any businesses it sold off.<\/p>\n

\u201cThey\u2019re sitting on some really good quality assets that they could potentially sell for higher funds than what the market is factoring in through the current stock price,\u201d he said. \u201cIf they can sell their assets at a higher price than what the market is factoring in, it will be a positive for shareholders.\u201d<\/p>\n

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Save articles for later Add articles to your saved list and come back to them any time. Fund manager Perpetual has received a $3 billion takeover bid from its biggest shareholder as it weighs whether to dissolve its three-pronged corporate structure and focus on its flagship asset management business to boost shareholder returns. On Wednesday, diversified investment house Washington H. 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