The Trust Company shareholders shy away from Equity Trustees offer

Equity Trustees has extended the take-over offer period for The Trust Company by a month, citing regulatory approval while also facing low levels of early interest in the offer.

Despite Equity Trustees’ offer being available to The Trust Company shareholders since March 18, it has reported that at present it only holds 1.3 per cent of The Trust Company.

Equity Trustees managing director Robin Burns says this level of interest was not unusual, given that many of The Trust Company shareholders were waiting for its board to respond to the offer and may be seeking financial advice before deciding to act. 

“We have been told there are The Trust Company shareholders that are likely to accept, and with the extension they have also been given more time to consider the offer,” he said.

Burns says the extension was the result of having to secure regulatory approval for the group to hold more than a 15 per cent stake in a trustee company. 

“This has been applied for and we may have to answer queries from the regulators but we expect a response in the short term,” Burns said.

The offer period was initially set to close on 6 May and will now close on 5 June at 7pm, with Equity Trustees urging The Trust Company shareholders to consider the offer and claiming the latter’s share price will likely fall if the take-over is unsuccessful.

Equity Trustees also states it has outperformed The Trust Company over one, three and 10-year periods in total shareholder returns and that The Trust Company shareholders may be eligible for Equity Trustees’ final 2013 dividend if the deal is concluded before June 30.

Late last week The Trust Company released its response to the take-over offer, strongly urging shareholders to reject the offer. It stated the offer does not give The Trust Company shareholders a fair share in the merged entity based on an offer ratio of 33 Equity Trustees shares for every 100 shares in The Trust Company.

The Trust Company also countered that the offer has been timed to exploit recent weaknesses in its share price and does not reflect the long-term trading price relativities of the two companies.

However The Trust Company says it is not opposed to a possible take-over, with chairman Bruce Corlett stating in the company’s response that it would consider such a move if the terms were more equitable and not unfavourable to The Trust Company shareholders.

These statements follow The Trust Company recently stating it had experienced a 7 per cent decline in net profit after tax for the financial year ending February 28. That announcement came as chief executive John Atkin departed and Shailendra Singh took over the reins of the group.