Why is Pendal (PDL) falling after PPT’s bid?

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Question asked 03/09/2022

Why is Pendal (PDL) falling after PPT’s bid?

Thanks for your ongoing brilliant advice, even though I still can't work out what 'fade' means. On 25 Aug you suggested that PPT's new bid for PDL was worth $5.63 (I think that's what you implied), and in fact PDL did move up to $5.60 on that same day, but only very briefly (unfortunately I didn't have a Sell order on at $5.60). Since then PDL has moved in a roughly $5.10 to $5.30 range and hasn't moved back to the $5.60 I expected it to trade at. What am I missing?

Answer

Hi Gil,

Thanks for the thumbs up, always appreciated by the team! Fade means to go against the prevailing move. Selling into the prevailing strength, buying into the prevailing weakness.

The issue for the PDL share price is the bid comprises of part cash & part Perpetual (PPT) stock i.e. the bid is made up of $1.976 in cash plus one PPT share for each 7.5 PDL shares held.

Hence as the value of PPT shares fall the offer price effectively goes lower – since the revised & improved bid on the 25th of August PPT has fallen from $30.44 to a low of $26.97 on Thursday revising the effective bid lower in the process. Right now, the bid is worth $5.40 using the formula of the PPT stock price ($26.67) minus their 97c upcoming dividend / 7.5 + $1.976 = $5.4027 as of Fridays close.

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Pendal Group (PDL)

LAST UPDATED 01/09/2022 15:58

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