Perpetual shares rocket after it rejects Soul Patts takeover bid

The news: Shares in Perpetual Group have jumped more than 7% after the investment manager received and flatly rejected a $3 billion takeover bid from Washington H. Soul Pattinson. Perpetual said the unsolicited offer materially undervalued the company, was conditional on an as-yet undecided demerger and introduced execution and operational risk that could undermine shareholder value.

The numbers: Soul Patts' bid for Perpetual was announced shortly after the bell on Wednesday afternoon, and the investment manager published its rejection just after 7pm AEDT. PPT shares were trading 7.4% higher by 11:30am AEDT at $25.51. Soul Patts' proposal had an indicative value of $3.06 billion, made up of a WHSP scrip worth $1.06 billion for Perpetual's wealth management and corporate trust businesses and a Perpetual Asset Management scrip worth an estimated $2 billion, to be distributed to PPT shareholders. Soul Patts currently owns up to 9.9% of Perpetual.

The context: It's the second straight day of gains for Perpetual, after it yesterday announced a potential demerger of its asset management, wealth management and corporate trust businesses as part of a strategic review. The investment manager has been undertaking a significant shakeup in recent months after posting a 42% profit drop in FY23, shuttering two funds and bidding farewell to a number of fund managers and staff.

What they said: "The Board has, together with its advisers, carefully considered the Indicative Proposal and unanimously determined that it is not in the best interests of its shareholders and therefore has rejected it on the same confidential basis as it was provided to Perpetual," Perpetual's board said in a statement.