Perpetual rebuffs $3bn bid from Washington H. Soul Pattinson

Perpetual Pengana Washington H. Soul Pattinson M&A

8 December 2023
| By Laura Dew |
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Perpetual has rejected a $3 billion acquisition bid from Washington H. Soul Pattinson (WHSP) as it announces a strategic review of its company.

Investment manager WHSP, which made a joint venture with Pengana earlier this year to establish Pengana’s private credit portfolio, made a non-binding indicative offer to acquire 100 per cent of Perpetual via a scheme of arrangement, conditional upon a demerger of Perpetual’s asset management business.

WHSP is already a Perpetual shareholder with a 9.9 per cent stake.

“WHSP has a deep understanding of Perpetual and its individual business segments, which each have different characteristics and most operate independently. WHSP believes the complexity of the Perpetual Group, together with the current market backdrop and Perpetual’s high financial leverage, is weighing on the share price and constraining Perpetual’s strategic flexibility,” WHSP said as its strategic rationale.

“In WHSP, Perpetual shareholders will not only continue to benefit from Perpetual Wealth Management and Perpetual Corporate Trust’s annuity-style earnings streams but also gain exposure to a broader, more liquid stock backed by a diversified portfolio of quality assets, a net cash position and a focus on wealth creation for retail shareholders.”

However, Perpetual rejected the deal as they felt it “materially undervalues” the firm’s various business divisions and would not be in the best interest of Perpetual shareholders.

In an ASX statement, the firm said: “It materially undervalues Perpetual and its corporate trust and wealth management businesses and offers WHSP shares as a consideration.

“It is conditional on a demerger of asset management which would be distributed in-specie to existing Perpetual shareholders.

“It introduces significant execution and operational risk over a protracted implementation period and consequently may have negative value implications for Perpetual shareholders.”

Earlier that day (6 December), Perpetual also announced a strategic review of its corporate trust and wealth management businesses. 

Since its annual general meeting on 19 October, the firm said, it has further progressed the evaluation of those strategic options and will be exploring the benefits of unlocking additional value for Perpetual shareholders through the separation of its corporate trust and wealth management businesses. It will also look to create a more focused asset management business.

In August, it shuffled its global asset management leadership to form one global division led by Rob Adams as chief executive of asset management, who will hold the role in addition to his group CEO role.

Graham Kitchen, current chair of Trillium and Perpetual corporate entities in the UK, will temporarily act as the global head of investment strategy while it sources a permanent candidate. 

Amanda Gillespie will continue to lead asset management in Australia, and Adam Quaife will lead global distribution – both will join the group executive committee.   

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