The Australian listed equities manager Perpetual is in play, with Washington H. Soul Pattinson making a $3bn scrip offer for the company that involves giving investors back its asset management arm.
Soul Patts announced late Wednesday after the Australian market had closed it had made an offer for Perpetual on November 21.
Already, Soul Patts owns over 9.9 per cent of Perpetual and counts itself as a long term shareholder.
Soul Patts said as part of the proposal, it intended to explore a potential separation of its Corporate Trust and Wealth Management business from its Asset Management business.
The Australian listed conglomerate Soul Patts has hired Macquarie Capital to advise on the transaction, while Perpetual works with Goldman Sachs, Bank of America and Luminis Partners on its own review to consider a break-up, as announced earlier on Wednesday.
Under its proposal, Soul Patts would acquire all of Perpetual by way of a scheme of arrangement, then undertake a simultaneous demerger of Perpetual Asset Management distributed in-specie to existing Perpetual shareholders.
Soul Patts would then retain Wealth Management and the Corporate Trust arm in exchange for Soul Patts shares, as well as assume responsibility for all group net debt and stranded asset costs.
“WHSP believes the indicative proposal provides a unique opportunity for Perpetual shareholders to unlock value in a tax efficient structure while retaining exposure to each of Perpetual’s three businesses,” the company said in a statement.
Soul Patts believes its offer implies an equity value of $3bn, comprising $1bn worth of its scrip and Perpetual Asset anagement scrip estimated to be worth $2bn.
It says its offer represents a value of $27 a share and a total enterprise value of $3.5bn.
The offer is a 28.6 per cent premium to the Perpetual share price on November 13 at $21.
After adjusting for the liabilities that Soul Patts will assume, and excluding the value of Perpertual Asset Management, the implied value for Corporate Trust and Wealth Management is $1.885bn, a 56.4 per cent premium to $1.2bn, the value that the Perpetual share price implies they are worth after adjusting for the liabilities and excluding the Asset Management unit as at November 13.
“As a long-term investor in Perpetual, Soul Patts has a deep understanding of Perpetual and its individual business segments, which each have different characteristics and mostly operate independently.
“WHSP believes the complexity of the Perpetual Group, together with the current market backdrop and Perpetual’s hgih financial leverage, is weighing on the share price and constraining Perpetual’s strategic flexibility.”
More to come.
MAC raises equity after passing on $1bn Portuguese acquisition
Metals Acquisition is understood to have been looking to buy Portuguese mine Neves-Corvo but has now moved on.
Sims could reap windfall from land sales
Some in the market believe that Sims needs to put some more thought towards selling more assets.