Australia’s Perpetual Turned Down a Billion-Dollar Takeover Bid

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On Wednesday, Australian Financial services firm Perpetual Ltd rejected a A$1.68 billion ($1.07 billion) takeover bid that arrived on Thursday, claiming that it substantially undervalued the company.

Perpetual turned down a $A30 per share offer from Barings Private Equity Asia (BPEA), which was recently acquired by EQT (EQTAB.ST), and Australian firm Regal Partners (RPL.AX).

In a separate statement, Regal Partners stated that it intends to acquire Perpetual’s asset management businesses, while BPEA intends to acquire Perpetual’s corporate trust and private client businesses.

BPEA is one of the largest private equity firms in the region, and EQT acquired it in March. According to its website, it manages assets totalling $20 billion.

Perpetual shares, with a market capitalisation of nearly A$1.55 billion, rose 6.3% in the final minute of trade on Wednesday, prompting the Australian Securities and Investment Commission (ASIC) to launch an investigation.

“ASIC was aware of the price movement in Perpetual shares yesterday and, as with all significant price movements around corporate transactions, our surveillance unit will review trading activity,” an ASIC spokesperson told Reuters in response to a question.

The Australian Securities Exchange (ASX) declined to comment, while Perpetual did not respond immediately.

Perpetual shares rose as much as 10.1% in the first half of Thursday, the company’s best session in more than two years, before falling back to be up 6.6%.

Perpetual announced in August that it would proceed with its planned acquisition of rival Pendal Group (PDL.AX), amounting to A$2.51 billion.

The private equity offer represents an 11.5% premium to Perpetual’s last close of A$26.90.

As of September 30, Perpetual had A$89.8 billion in assets under management.

The saga highlights the complex dynamics in major corporate deals, with financial and legal considerations coming into play. It remains to be seen what will come of Perpetual’s rejection and the ensuing investigation, but it is sure to be a story worth watching in the business world.

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