Perpetual rejects $2.5bn takeover offer

Perpetual has rejected an unsolicited takeover bid from Swedish private equity giant EQT which valued the firm at $2.5 billion.

The "unsolicited, non-binding, conditional and indicative proposal" was for $21.64 cash per share, representing a 40% premium to Perpetual's closing price on Tuesday prior to announcing it had received the offer.

"The indicative proposal was highly conditional and did not adequately represent fair value for Perpetual shareholders in the context of a change of control transaction and the board determined that it was not in the best interests of Perpetual shareholders," the board said.

"Perpetual shareholders do not need to take any action in response to the indicative proposal. The company will keep shareholders updated in accordance with its continuous disclosure obligations."

Confirmation of the takeover offer was announced to the ASX after market close having requested a trading halt earlier in the day.

Pitcher Partners chief investment officer Cameron Curko said EQT may come back with a revised offer.

"EQT will have some scope to sweeten the deal further but will also draw a hardline on where value is reasonable. The reality with how the business has been managed, they might have the chance to reapproach down the track if management is unwilling to play ball at this juncture or price," Curko said.

"Perpetual has been a complicated saga and already subject to sizeable takeover interest. Under previous management, it also embarked on an acquisition spree of mainly active managers that has not worked out in the face of passive funds taking increased share, as well as the investment style of the acquired businesses not being in favour necessarily. All this coincided with a weaker valuation."

Curko said looking at the business, the turnaround prospects for asset management are not straightforward.

"It's likely that the wealth and corporate trustee arms offer more appeal to EQT, while it would look to stabilise asset management, divest segments and capitalise on still high-income generation," he said.

"Management's rejection of the offer is perhaps a matter of time with the continued slide in share price likely to beckon further interest.

"Valuation-wise, it wasn't an unreasonable attempt by EQT, albeit opportunistic. It's to be expected for structurally challenged businesses with some trophy assets that PE interest will eventually appear - or reappear in this case."