Thoughts on PPL’s takeover of PDL?
What are you thoughts on the PPL takeover of PDL. The price differential as of today appears to be around the $4 area. If am I reading this right, it looks like a good trade to buy into PDL. Thanks Shane
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Answer
Hi Shane,
We covered this hot topic earlier in the week:
“When the deal was announced it was framed as a takeover worth around $6 for Pendal shareholders like MM, however, there is a script component to it which means as Perpetuals (PPT) share price has fallen – and fallen more heavily than Pendal’s, so too has the implied bid amount. The deal comprises 1 PPT share for every 7.5 PDL shares held plus a cash component of $1.976. There was a dividend that we also needed to consider with PPT trading ex on the 8th of September, however, that is no longer in play. The value as of Tuesdays close is $5.12 for PDL shares versus yesterday’s close of $4.43. While there is clearly an arbitrage playing out which will influence performance in the short term (hedge funds selling PPT & buying PDL) we think the deal has merit. We also think that the landscape for funds management is changing, with the big players needing to get bigger / more efficient as large super funds beef up their own internal capabilities, while the smaller, specialist boutique firms continue to gain an advantage.”
