Perpetual considers revised KKR proposal after heavy tax treatment
Perpetual is considering a revised proposal from KKR regarding its Wealth Management and Corporate Trust businesses.
In a release to the ASX, the firm said it had received a non-binding proposal from the private equity giant.
The Australian Financial Review reported that the revised proposal was an enhanced all-cash proposal at more than $8 per share, but the ASX release said details had been “not accurately described in the media”.
The statement read: “Perpetual has continued to engage with KKR and confirms it has received non-binding, conditional, indicative proposals from KKR.
“The latest revised proposal and its quantum are not accurately described in the media. It contemplates outstanding commercial terms that would need to be agreed, and the net proceeds shareholders would receive under the revised proposal are uncertain at this stage.
“The Perpetual board is assessing the revised proposal and associated terms and will update shareholders on its engagement with KKR as soon as possible.”
It was first announced in May 2024 that KKR would acquire the Wealth Management and Corporate Trust arm of Perpetual, as well as the Perpetual brand, and leave behind the Asset Management division. However, subsequent guidance from the Australian Taxation Office (ATO) has indicated the deal may not be in the best interest of shareholders.
The ATO ascertained Perpetual’s primary tax liability could be as much as $488 million if the deal proceeded. Further additional penalties and interest could also cause this sum to rise by as much as a further 50 per cent, it said.
As a result, the previously announced advised range in respect of tax and duties rose dramatically from $106–227 million to $493–529 million.
This meant estimated cash proceeds to shareholders from the transaction, if the scheme is implemented, would reduce from $8.38–9.82 per share to $5.74–6.42 per share.
While Perpetual said it had “strong grounds” to dispute the ATO’s position, it would be a costly action with no certainty of the outcome. As a result, the two parties were engaging to consider the potential impact of the transaction.
In an update on 17 December, the firm said with the “risk and magnitude” of these changes, an independent expert had ruled the deal was now less attractive to shareholders.
“The independent expert has informed Perpetual that the risk and magnitude of the increased potential tax liabilities, if the transaction were to be implemented, mean that it would not be able to form an opinion that the scheme is in the best interest of shareholders.”
AUTHOR
Laura Dew
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