Perpetual and Pendal to square off in court

The Supreme Court of NSW will consider whether the meeting of Pendal shareholders to approve Perpetual’s planned takeover should be convened and the scheme booklet dispatched to investors.

The two firms appeared in court on Friday, where, by agreement between the parties, the court made orders to stand over the proceedings to Wednesday, 16 November.

According to a statement released by the firms on Monday, the two have also sought declerations from the court in relation to “certain matters” with respect to the operation of the Scheme Implementation Deed dated 25 August, including “clarifying the remedies which may be available to Pendal in the event that Perpetual breaches the Scheme Implementation Deed or indicates that it will do so”.

“The Pendal board and management continue to strongly support the rationale for the combination and will continue to work for an expeditious implementation of the transaction in the best interests of its shareholders,” Pendal said.

Following last 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 at the time 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.”