Perpetual Limited has 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.
In a separate note to shareholders, Perpetual has stressed the deal with Pendal would proceed, despite takeover attempts from the BPEA Private Equity Fund VIII and Regal Partners Limited consortium.
“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,” the statement read.
“For clarity, the Deed does not preclude Perpetual responding to a proposal, but any resulting transaction can only be implemented in circumstances where the Scheme is accommodated.
“Any speculation to the contrary is inaccurate and contrary to a certain and well-functioning market for corporate control.”
The BPEA Private Equity Fund VIII and Regal Partners Limited consortium said its revised proposal was structured to enable Perpetual to progress discussions with the Consortium without impeding the Pendal transaction.
Mr O’Connor went on to claim that the improved proposal would create “significantly more value” for Perpetual’s shareholders than the Pendal transaction.
“The consortium is confident that there is no impediment to Perpetual engaging with the Consortium.
“We consider that doing so, as part of a short and expedited due diligence process, would have delivered a strongly preferred outcome for Perpetual shareholders,” Mr O’Connor said.