PPT -12.63%, PDL +10.54%: Another twist in this ongoing tussle today with the pendulum swinging back in favour of Pendal. This morning saw a number of announcements including a court ruling regarding the proposed merger. The key points being:
- PPT had sought clarification with regards to the terms of the fiduciary carve out with the PDL deal and in particular the scope of the directors’ obligations with such a deal, noting that typically directors have to act in the best interests of shareholders.
- Basically, PPT was trying to say they could break the PDL deal on this basis and pay the stated $23m break fee if it was in the best interests of shareholders.
- In response, the court advised Perpetual (but didn’t rule on) that Pendal could have the right to compensation above and beyond the break fee if PPT gets out of the deal to seek further performance.
- Effectively, we take that as meaning PDL will go after PPT for $$$ over and above the break fee if PPT walks away.
- As such the chance of a deal being agreed to by PPT outside of the PDL deal has decreased hence the respective moves in SP today.
- This doesn’t necessarily mean that PPT couldn’t walk but the magnitude of what PDL may then ask for or go to the courts for is unknown and creates a big variable in the whole process, something that Phil King & Co would ideally like to quantify.
MM remains long PDL, believing there is much more to play out
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