The twists and turns in the battle to snare financial services firm The Trust Company (ASX: TRU) continued today with a third bidder throwing its hat in the ring.
Diversified wealth manager IOOF (ASX: IFL) today announced it had submitted a proposal to acquire 100% of The Trust Company by way of a Scheme of Arrangement. The offer is valued at a “guaranteed minimum cash consideration” of $6.42 per share compared with the current trading price of $6.26. The offer also includes a “share consideration alternative” of 0.74 IOOF shares per Trust share – at the time of the announcement this alternative offer was valued at $6.73 per share.
The takeover of The Trust Company is turning into somewhat of a saga for shareholders as it enters its eighth month. Equity Trustees (ASX: EQT) initially approached The Trust Company on the 21st of February with an off-market takeover offer which valued The Trust Company at $5.28 per share based on the offer of 33 Equity Trustee shares for every 100 Trust Company shares and the right to retain dividends under certain conditions.
Then on the 7 May, fund manager Perpetual (ASX: PPT) entered the bidding with a Scheme of Arrangement offering an implied value to Trust’s shareholders of $6.39 per share. The offer involves 0.1495 Perpetual shares for each Trust Company share plus a 22-cent special dividend.
In response to Perpetual’s offer, Equity Trustees then came back with a revised proposal on 14 May, upping its offer to 37 Equity Trustee shares for every 100 Trust shares plus a 22-cent special dividend.
The offer of a share component to the takeover offers for The Trust Company’s complicates matters for shareholders and investors, as every time any of the four parties’ share prices move it alters the value on offer. For the enterprising investor, whether an acquirer is offering cash or shares or both the opportunity to profit from “takeover arbitrage” can be very compelling.
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Motley Fool contributor Tim McArthur owns shares in Perpetual.