EQT Raises Offer for Perpetual

EQT AB has increased its bid for Perpetual, a financial services firm, to $22.07 per share, a 2% increase from its previous offer of $21.64. The new offer values Perpetual at $2.55 billion, a $50 million rise from the previous offer.

The revised offer comes after Perpetual rejected EQT’s initial unsolicited takeover bid earlier in the month. Perpetual said the revised indicative proposal is subject to numerous conditions, including completion of the sale of its Wealth Management business to Bain Capital.

Conditions also include satisfactory completion of due diligence, negotiation and execution of binding transaction documentation, regulatory approvals, and other customary conditions. The Perpetual board is currently considering the offer and said there is no certainty the proposal will result in a binding offer.

Pitcher Partners chief investment officer Cameron Curko said he suspects a more meaningful premium is needed to see the board proceed given how deep value the stock has traded of late. The EQT increased bid of 2% shows some scope for negotiation on EQT’s part but remains broadly inclusive.

Perpetual has been trying to simplify its services by narrowing them down to the corporate trust and asset management business. It has also been on a mission to revive the lacklustre performance of boutique J O Hambro Capital Management and boost its assets to $60 billion by 2030.

Earlier in the year, Perpetual entered a binding agreement with Bain Capital to sell its wealth management business for $550 million. Curko noted the takeover interest from private equity is expected for structurally challenged businesses with some trophy assets.

Ultimately, this is a cash-generative business with the sale of its wealth arm simplifying its operations further. The next consideration will be whether asset management should likewise be retained given the structural issues there with continued, broad net outflows a warning sign for future earnings.

The Perpetual board remains confident in Perpetual executing its strategy, including its simplification program, the value of its diversified earnings profile, and the execution of the sale of Wealth Management. They told shareholders to not take any action at this time.

The Perpetual board will likely carefully consider the revised offer and weigh its options before making a decision. In the meantime, shareholders will be watching closely to see how the situation develops.