Equity Trustees lifts offer for The Trust Company

Equity Trustees (EQT) has responded to Perpetual’s move to take-over The Trust Company (Trust) with a revised proposal that would see it offer 37 EQT shares for 100 Trust shares, and a special dividend of 22 cents per share. 

The revised proposal is an increase on the previous offer of 33 EQT shares and adds the special dividend. EQT stated that the combination of the two represented a 12 per cent increase on the previous offer and was superior to the recent offer made by Perpetual for Trust. 

EQT also stated that it is considering a partial cash component in the revised offer and that the long-term value of the offer - assuming the merged entities can benefit from cost savings produced by the take-over - would be around $8 per share. 

However EQT said the current value of the offer is dependent on its actual share price and the value of franking credits that will be available to Trust shareholders, factors which will be dictated by the market. 

While the revised proposal has been transmitted to the Trust board, EQT has also requested access to due diligence data before finalising the proposal, stating that it did not have access to this information when it made the original offer. 

Given that Perpetual had access to such data, EQT has also called for access to the information on the same terms as that received by Perpetual in order to quantify the implementation costs before proceeding with the offer. However, while EQT has asked for access for one week, it notes that Perpetual had access to the information for a month, and that the provision of the data is necessary and in the interests of Trust shareholders when considering EQT’s revised offer. 

EQT has claimed the revised offer would also offer a higher dividend yield than Perpetual. It said its current yield is 5.1 per cent (based on current share price and dividend payments for the second half of 2012 and first half of 2013), compared with Perpetual’s yield of 2 per cent on the same basis. 

Under the revised offer, Trust shareholders would also own 62 per cent of the combined EQT/Trust business compared with a maximum of 10.9 per cent under the Perpetual offer, according to the EQT documents lodged with the Australian Stock Exchange today.

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