Platinum shares soar on L1 Capital merger talks
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More news: Shares in Platinum Asset Management rocketed after it was announced L1 Capital had picked up a 9.6% stake in the rival fund manager and opened talks over a possible merger.
Platinum shares were up 10.5% to 63 cents at 1:30pm AEST.
L1 Capital buys Platinum stake, in talks for merger
The news: Fund manager L1 Capital has cornered a hefty stake in troubled rival Platinum Asset Management and is in discussions on a potential merger of the two investment firms.
The numbers: L1 said on Thursday it had acquired a 9.6% interest in Platinum from founder Kerr Neilson. It has also been granted a call option on Neilson’s balance stake, which if exercised will give L1 a 19.9% stake in Platinum.
The two firms separately said they are in early discussions regarding a potential merger that could create an investment business with funds under management of $18 billion.
The context: Under the terms being discussed, L1 shareholders would own 75% of the combined business. Platinum said its shareholders are expected to benefit from greater scale and diversity of investment strategies and distribution channels, as well as access to meaningful cost efficiencies. It added that discussions are at a preliminary stage, and there is no guarantee that any transaction will eventuate.
Platinum in February reported a 55% fall in first-half net profit and announced its co-chief investment officers Andrew Clifford and Clay Smolinski would step down. The investment manager has been plagued by outflows in recent months and ended discussions with rival Regal Partners in December regarding a merger.
The source: ASX
