Is bad blood brewing between Pendal and Perpetual?

Following Thursday's announcement that Perpetual had brushed off a second “unsolicited” takeover proposal from a consortium comprising of BPEA Private Equity Fund VIII and Regal Partners Limited in just a week, Pendal released a statement noting that the Scheme Implementation Deed the pair inked in August “does not permit Perpetual to terminate or otherwise abandon the scheme in order to pursue a proposal”.

Pendal also confirmed that Perpetual had requested “a delay”, which it did not wish to grant and that it intended to proceed with the previously agreed timeline.

“Pendal wishes to update its shareholders and the market that despite requests by Perpetual for a delay, it intends to proceed to the first court hearing for the scheme this week and to seek orders convening the scheme meeting and for despatch of the Scheme Booklet to shareholders, with a scheme meeting to occur in mid-December 2022,“ the firm said, hinting at strained relations.

“Pendal notes that while the Scheme Implementation Deed permits Perpetual to engage with another proposal, it does not permit Perpetual to terminate or otherwise abandon the scheme in order to pursue a proposal,” Pendal said.

Hours later, Perpetual filed another statement to the ASX and provided a different version of events, noting that it did not seek a delay but a “short deferral”.

“Perpetual Limited confirms that it has proposed to Pendal Group Limited a short deferral to the first court hearing for the Scheme of Arrangement in light of developments since that hearing was scheduled.”

Perpetual explained that due to these developments — the two indicative offers from the consortium and speculated interest in Perpetual by other parties — it did not consider it feasible to settle disclosure for the scheme booklet “of the required standard” on the proposed timetable.

“The requested change to the first court hearing for the scheme would not impact the target implementation date,” the firm said.

“Perpetual’s board needs to fulfil its fiduciary and statutory duties to its shareholders, in light of the recent approaches from the consortium and further interest in Perpetual, as well as market developments and Pendal-specific considerations, including to assess and make the required disclosure in the scheme booklet,” it continued.

Perpetual also disputed the final paragraph of Pendal’s announcement, and explained that the signed deed provided for an exit under special circumstances.

“The Scheme Implementation Deed also provides for a situation where the Perpetual Board determines that to fulfil its fiduciary or statutory duties to its shareholders, Perpetual should not proceed with the Pendal transaction or should pursue a major transaction which prevented the Pendal transaction from being implemented.

“In that case, Perpetual may have an obligation, subject to the terms and conditions of the Scheme Implementation Deed, to pay to Pendal up to $23 million.”

Perpetual rejects improved takeover bid

On Thursday morning, Perpetual Limited notified shareholders of a second “unsolicited” conditional, non-binding indicative proposal from a consortium comprising of BPEA Private Equity Fund VIII and Regal Partners Limited.

The consortium improved their initial bid of $30.00 per share (announced on 3 November), placing a follow-up offer to purchase 100 per cent of the shares on issue for $33.00 cash per share.

But Perpetual told shareholders the offer “continues to materially undervalue the company”.

“Perpetual’s board has considered a number of factors, including value, high conditionality, transaction and execution risks, in determining that the consortium’s revised Indicative Proposal is not in the best interests of its shareholders and has therefore rejected the offer,” the company noted in a statement on the ASX.

The firm has again advised shareholders to “take no action”, adding it would inform the market of any subsequent developments.

The consortium noted its disappointment with Perpetual’s rejection of its “compelling” second offer.

“We are deeply disappointed by the decision of the Perpetual Board to reject the Improved Proposal,” Regal’s chief executive officer and managing director, Brendan O’Connor, said.

Perpetual is currently actioning its own takeover bid, entering into a binding scheme implementation deed with investment manager Pendal, under which it intends to acquire 100 per cent of shares.

Pendal shareholders will receive one Perpetual share for every 7.50 Pendal shares plus $1.976 cash per Pendal share. This implies an offer price of $6.02 for each Pendal share based on Perpetual’s closing price on Wednesday, 24 August.

As such, Perpetual and Pendal shareholders are expected to own approximately 53 per cent and 47 per cent respectively of the combined group shares on closing, based on the current number of shares outstanding.