Swedish PE giant sweetens offer bid for Perpetual

EQT AB has sweetened its offer bid for Perpetual, after the financial services firm rejected the unsolicited takeover bid from the Swedish private equity giant earlier in the month.

The revised offer price of $22.07 is a 2% bump from its previous offer of $21.64 cash per share. The new offer values Perpetual at $2.55 billion, a $50 million rise from the previous offer.

"The revised indicative proposal is subject to numerous conditions, including completion of the sale of Perpetual's Wealth Management business to Bain Capital, satisfactory completion of due diligence, negotiation and execution of binding transaction documentation, regulatory approvals and other customary conditions," Perpetual said.

Pitcher Partners chief investment officer Cameron Curko said he suspects a more meaningful premium is needed to see the board proceed given how deep value the stock has traded of late.

"The EQT increased bid of 2% shows some scope for negotiation on EQT's part but remains broadly inclusive. It looks like a stronger bid or, alternatively, an interested third party will be needed for an actual takeover to proceed," Curko said.

Perpetual also informed investors EQT AB said the revised proposal itself will be regarded as being automatically withdrawn if it is disclosed.

"Notwithstanding the inclusion of this statement, Perpetual considers it appropriate to inform Perpetual shareholders of its receipt," it said.

The Perpetual board is currently considering the offer and said there is no certainty the proposal will result in a binding offer. It told shareholders to not take any action at this time.

"The Perpetual board remains confident in Perpetual executing its strategy, including its simplification program, the value of its diversified earnings profile (provided by the Corporate Trust and Asset Management businesses) and the execution of the sale of Wealth Management," it said.

When the first offer was made, Curko had said EQT AB might come back with a revised offer.

Curko noted the takeover interest from private equity is expected for structurally challenged businesses with some trophy assets.

Perpetual has been trying to simplify its services by narrowing it down to the corporate trust and asset management business. It has also been on a mission to revive the lacklustre performance of boutique J O Hambro Capital Management and boost its assets to $60 billion by 2030.

Earlier in the year, Perpetual entered a binding agreement with Bain Capital to sell its wealth management business for $550 million.

"Ultimately this is a cash-generative business with the sale of its wealth arm simplifying its operations further. The next question will be whether asset management should likewise be retained given the structural issues there with continued, broad net outflows a warning sign for future earnings," Curko said.