Perpetual shares fall as KKR talks end
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More news: Perpetual shares dropped after the fund manager closed talks with private equity group KKR over a proposed takeover of its corporate trust and wealth businesses.
Perpetual shares were down 3.6% to $22.91 at 12:50pm AEDT, having added more than 15% since the turn of the year.
Perpetual rejects KKR proposal, ends talks
The news: Fund manager Perpetual has terminated engagement with KKR after an independent expert report found the private equity giant's takeover offer for its corporate trust and wealth businesses was not in the best interest of its shareholders.
KKR says a break fee is payable and has reserved its rights to seek further damages, while Perpetual has rejected these claims.
The numbers: Perpetual said that as part of its strategic review and separation program in preparation for the deal with KKR, it has incurred post-tax transaction and separation costs of $42.6 million for the 12 month period to 31 December. $24.4 million will be treated as significant items as part of its first-half results.
The context: In December, the Australian Taxation Office (ATO) advised that the transaction with KKR would incur taxes and duties of around $493 million and $529 million, substantially higher than the earlier estimate of between $106 million to $227 million.
Perpetual said today that it has "engaged extensively" with KKR since the ATO's feedback, including on revised proposals received from the private equity group. However, Perpetual said its board has determined that the value and terms of those revised proposals were not in the best interests of shareholders and discussions have now ended.
The fund manager said it will continue to execute on its business separation program to establish standalone and more autonomous businesses, it said, as well as implementing a new operating model for its asset management segment and delivering an improved cost reduction program.
Perpetual said it will continue to pursue a sale of its wealth management business, with proceeds from a planned sale used to strengthen the group's capital position, as well as support investment in organic growth across its existing corporate trust and asset management arms.
Perpetual's chairman Tony D'Aloisio, who was due to retire after the finalisation of the KKR transaction, will now make way for his successor Gregory Cooper on Thursday.
What they said: "Today's path forward retains earnings diversification in the near term while we work toward implementing a leaner, more simplified operating model with three very focused businesses that can deliver better returns and with a stronger balance sheet to support investment in growth over time," said Perpetual's CEO and managing director Bernard Reilly.
The source: ASX announcement
