Is Perpetual a takeover target?

The Perpetual Ltd (ASX: PPT) share price is up 12.9% to $43.45 today, despite the international equities manager releasing no specific news to the market.

Even after today’s rise the Perpetual share price is still down 16% over the past year, although a double-digit rise like today’s on the back of no public news is very unusual.

One possibility is that a sell side broker has upgraded its rating on the stock, although that is unlikely to lead to such a large share price move.

The traded volume in the stock has also been heavy today at around $47 million at 15.45pm, which is more than 4x the daily average to suggest the move is either the result of bargain hunting by institutional investors, or speculators are buying up the stock on the back of rumours or tip offs around a potential takeover or asset sale.

In the past Perpetual has been rumoured to be a takeover target for the likes of Janus Henderson Group (ASX: JHG) or other larger asset mangers, while its two non-core operating divisions of Perpetual Private and Corporate Trust have also regularly been labelled potential spin offs. Divesting either or both these businesses could make sense for Perpetual if it was serious about simplifying and improving its core asset management business.

I wouldn’t rate Perpetual as an investment grade business for dozens of reasons and you only have to look to its share price history to see how the stock has gone nowhere in 18 years since 2001. This despite the tailwinds of compulsory superannuation and generally rising equity markets.

That’s not to say it won’t attract a suitor for all or parts of its business.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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