Tax bill poses hurdle on Perpetual-KKR deal
Make us a preferred source
Make us a preferred source on Google
The news: Investment manager Perpetual says the independent expert assessing the sale of some of its businesses to KKR is unable to back the deal due to a substantially higher tax bill for the transaction.
The numbers: In May, Perpetual agreed to sell its corporate trust and wealth management businesses to private equity firm KKR for $2.2 billion.
However, the Australian Taxation Office ruled earlier this month that the transaction will incur taxes and duties of about $493 million and $529 million, substantially higher than the previous estimate of between $106 million to $227 million.
The context: Perpetual said on Tuesday that it has been informed by the independent expert that the risk and magnitude of the increased potential tax liabilities mean that it "would not be able to form an opinion" that the deal is in the best interests of shareholders.
Perpetual said it is continuing to engage constructively with KKR in relation to the deal.
Analysts widely expect the deal to fall through given that cash proceeds for the transaction will now reduce significantly.
The source: ASX announcement
