Australia’s Perpetual: KKR bid low but will talk

SYDNEY (BestGrowthStock) – Australian fund manager Perpetual (PPT.AX: ) said an up to $1.73 billion takeover offer by Kohlberg Kravis Roberts & Co (KKR.N: ) was low but it would continue talks, indicating it may agree to a deal under better terms.

Perpetual, one of Australia’s top independent fund managers in the $1 trillion wealth management sector behind AMP (AMP.AX: ) and AXA Asia Pacific (AXA.AX: ), said it will give limited financial information to KKR and seek its deal intentions.

Investors expect KKR — if it wins over the company — to split Perpetual’s wealth management business from its corporate trustee unit and leverage the debt free wealth business to accelerate growth.

KKR’s interest in the fund house comes as Australia’s wealth management industry, the world’s fourth-largest, is seen growing at over 12 percent a year for the next five years, due in part to compulsory private pension contributions and a booming resources sector.

“It is positive for investors. They are trying to work out the structure and metrics of the deal including the need for more money,” Peter Vann, a fund manager at Constellation Capital said.

Perpetual’s shares have jumped 21.6 percent since KKR lodged its indicative offer last week and have wiped out all their losses so far this year.

KKR offered A$38 to A$40 ($37.36- $39.36) a share when Perpetual’s shares were trading at A$30.97. Perpetual shares closed on Friday at A$37.15.

Analysts were mixed in their initial reaction with some expecting Perpetual to outright reject the offer given the bid came when Perpetual was trading at a low point, while others had said it would be difficult to beat the offer at this juncture.

However a hostile bid would have struggled given the loyal shareholder base for the 125-year old Perpetual.

(Reporting by Narayanan Somasundaram; Editing by Balazs Koranyi)

Australia’s Perpetual: KKR bid low but will talk