Regal Partners shares tumble after ending Platinum pursuit
Make us a preferred source
Make us a preferred source on Google
More news: Shares in Regal Partners fell after the investment manager ended its takeover interest in Platinum Asset Management.
Regal shares were down 5.3% to $3.79 by 2:50pm AEDT, having gained more than 60% over the last 12 months.
The fall came despite E&P Capital calling the move "positive" for Regal.
The alternative investment manager said in a statement that its growth-focused strategy remains unchanged and that it will "continue to assess organic and inorganic opportunities prudently as and when they arise".
Bell Potter downgrades Platinum to 'sell' as Regal ends takeover interest
More news: The end to Platinum Asset Management and Regal Partners' acquisition discussions has confirmed Bell Potter analysts' rating downgrade on Platinum to 'sell'.
Late last week, Bell Potter analysts downgraded Platinum from 'hold' and said they assumed that it would not be acquired by Regal and therefore made the changed their recommendation.
Bell Potter also slashed its target price on Platinum from $1.21 to 74 cents.
Bell Potter analyst Marcus Barnard said he struggles to see how Platinum will deliver more to shareholders than the $1.30-per-share offer that was tabled by Regal in September. Meanwhile, Platinum's turnaround strategy is "uncertain, long term, and difficult to quantify", he said.
Bell Potter increased its assumed outflow rate from 8% to 15% and cut its adjusted earnings per share forecast by 20.5% in FY25, 41.6% in FY26 and 50% in FY27.
Platinum shares were down 13.6% at 90.3 cents by afternoon trade, having dropped by more than 19% earlier in the session.
Platinum shares tank after ending takeover talks with Regal
More news: Shares in Platinum Asset Management plunged in early trading after discussions over a potential takeover by ASX investment rival Regal Partners ended without a deal.
Platinum shares fell 16.8% to 87 cents by 10:50am AEDT and over the past 12 months has plummeted 32.92%. Regal shares were down 0.8% to $3.97.
What they said: "The ability for [Regal] to make a transaction accretive rested heavily on what level Platinum [funds under management] could be stabilised at," E&P Capital analyst Olivier Coulon said.
"While [Regal] has not commented on why it is not pursuing a transaction, we suspect the continued outflows and negative relative performance of Platinum may have reduced [Regal] management’s confidence in enabling any potential combination to be value accretive," he said.
Platinum and Regal end discussions over potential buyout
The news: Platinum Asset Management and Regal Partners have terminated discussions after the ASX investment rivals closed a period of mutual due diligence, designed to allow Regal to improve on an initial takeover offer that was rejected in September.
The context: Platinum said that the companies conducted an initial period of mutual due diligence which has now concluded, and discussions with Regal have ceased.
Platinum's board also declared a fully franked special dividend of 20 cents per share, following a reassessment of its capital management policy. Under Regal's initial proposal, Platinum shareholders would have received a special dividend of the same value, in addition to 0.274 Regal shares per Platinum share held.
Platinum said it remains "fully focused on executing its restructure and turnaround strategy" and has "illustrated momentum in the areas of cost control, remuneration re-design, product rationalisation and a review of the investment process, all initiatives designed to stabilise and reset the business in order to return to a growth footing".
Meanwhile, the investment manager announced its first partnership with US-based GW&K Investment Management, a small cap specialist with $86 billion in funds under management.
Under the agreement, Platinum has been appointed to exclusively distribute GW&K's global small cap strategy to the Australian retail market.
The sources: ASX announcement, E&P Capital research, ASX announcement
