Wealth manager Perpetual (ASX: PPT) surged +16.8% on Wednesday, before announcing a takeover approach – lose lips sink ships!
We’ve now heard that Perpetual has rejected a takeover proposal from a consortium backed by Swedish private equity group EQT, saying the highly conditional indicative offer of $21.64 a share did not adequately reflect the company’s value. The bid, which valued Perpetual at around $2.5 billion, represented a premium of more than 40% to this week’s low, before the renewed takeover speculation. The decision leaves the door open for a higher offer, but it feels like the board will need some convincing and shareholder pain of recent years could persist.
EQT have circled PPT before; four years ago they tried to buy the manager with Baring and Regal Partners, plus two years ago it failed in PPT’s break-up auction. From afar, EQT and the PPTs board don’t feel on close terms. We wouldn’t term PPT as a well-run business; hence, it’s not on our radar, but there is deep value in the business below $20. Unfortunately, the misfiring management aren’t necessarily aligned with shareholders, many of whom would probably love to exit in the mid-$20s – the stock’s highs of the last few years.
- We like the risk/reward towards PPT around $18 but were unlikely to enter the next chapter of this messy M&A saga.
MM is cautiously bullish on PPT around $18
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