The directors ofPermanent Trustees Companyand the Trust Company of Australia have announced they have agreed to a merger of the two groups creating a single entity with a combined market capitalisation of $180 million and funds under management of $1.15 billion.
The two groups made the announcement to theAustralian Stock Exchangeearlier today and in a statement submitted said that the proposed merger would happen through a scheme of arrangement between Permanent and its shareholders.
As part of the merger the shares in Permanent would be transferred to the Trust Company and in turn all Permanent shareholders would receive 1.18 shares in the latter in exchange for each share in Permanent.
This arrangement would result in the shareholders of each group holding 50 per cent of issued capital in the merged group. However shareholders will be entitled to fully franked dividends of $1 for Permanent shareholders and 22 cents for Trust Company shareholders which will be paid when the merger is complete.
Trust Company managing director Jonathan Sweeney says the driver behind the deal has been the need for consolidation in the trustee industry and the two groups were similar enough in makeup to justify moving ahead with a merger.
Sweeney said the merger would also provide increased financial strength for any future plans as the two groups would have combined revenues of $60 million per annum and pre tax cost savings of $5 million per annum.
The combined group would operate in the typical areas of funds management, superannuation and financial planning as well as corporate services, wills and estates, custody, compliance and securitisation services.
Permanent chair John Thame says the director of Permanent are recommending to shareholders to support the proposal and vote in favour of the move which will also need court approval.
Other hurdles include Trust Company shareholders approving changes to the company’s constitution to effect the merger and regulatory approvals, including a number of amendments to the Queensland Trustee Companies Act.
Thame will also become the chair while Sweeney will take on the role of managing director with five Permanent directors and six Trust Company directors slated to comprise the board of the merged group.
However Permanent managing director Paul Lahiff and Trust Company chair Gordan Moffat will not take up places on the new board which will be reduced by six members at the 2003 annual general meeting of the new group.
