The Trust Company (Trust) will continue to recommend Perpetual's take-over offer to its shareholders ahead of a competing offer from Equity Trustees (EQT) after receiving an expert's report on the synergies derived from the take-over.
In a statement released to the Australian Securities Exchange, Trust stated that Ernst and Young, as an independent expert, had completed its assessment of the potential implementation costs and synergies within the take-over offers from EQT and Perpetual.
Ernst and Young found that Perpetual's synergy and implementation cost estimates were realistic but those of EQT were lower than estimated by EQT.
In early May Perpetual indicated estimated synergies of $15 million per annum were possible, with Trust's board entering into a binding Scheme Implementation Arrangement with Perpetual for it to purchase the whole of Trust.
In a revised offer in late June EQT stated it expected cost savings to be from $8 million to $11 million per annum, with potential synergies of $15 million. EQT released the figures based on publicly available data as due diligence access to Trust had been withdrawn.
In the statement Trust said that the Ernst and Young report found that only "$7.5 million of synergies claimed by EQT were supportable". Trust also stated EQT's implementation costs were considered to be too low.
Trust will make further enquiries with EQT so that it may fully evaluate its offer and "provide shareholders with sufficient information to make a fully informed decision".
As a result Trust will be asking EQT for access to relevant information and personnel, but continues to recommend the Perpetual offer to its shareholders, stating that it believes it to be a superior offer.