Equity Trustees calls on Trust to consider recommending take-over offer

24 July 2013

Equity Trustees (EQT) has written to Trust Company (Trust) requesting full access to an independent expert's report, a reciprocal due diligence process and assurance that Trust's board considers there is a reasonable prospect that EQT may acquire Trust.

In the letter, which has been posted to the Australian Stock Exchange, EQT chair James Killen has written to Trust chair Bruce Corlett requesting full access to a report which stated EQT's take-over offer would provide lower synergies than the competing offer from Perpetual.

The report, produced by Ernst and Young as an independent expert acting for Trust, stated that the EQT's estimated synergies of $15 million were too high and were likely to be around $7.5 million, while Perpetual's estimation of $15 million was achievable.

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In a statement released yesterday Trust indicated it would seek further information from EQT regarding its bid. In response Killen stated today that this would be "an unnecessary and fruitless exercise for all concerned" given that Trust was continuing to recommend an alternative bid.

Killen also stated that before EQT would engage in further discussions with Trust it would require assurance that there is "a reasonable prospect of EQT acquiring Trust" and that Trust "would consider recommending our improved offer to your shareholders".

Killen defended EQT's synergy estimates and requested full access to the Ernst and Young report so it could assess how its own assessment differed and countered that since Trust had requested due diligence access to EQT this process should be reciprocal and at the same level offered to Perpetual.

EQT had been offered mutual due diligence access by Trust in April in the event EQT made a higher offer and stated in its letter that only historical information was available, without the necessary synergy information EQT required.

At the same time EQT rejected a request by Trust for due diligence access to a number of items claiming that its recommendation of Perpetual's offer and the lack of assurances provided so far would make the provision of the information commercially imprudent to provide.

Killen asked that Trust refocus its list of due diligence requirements to those "that are material to Trust's decision making and associated shareholder consideration" and it in turn provide the same details to EQT.

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