Pendal (ASX:PDL) share price rockets 23% on $2.4b takeover approach

What a start it has been for Pendal shares this week…

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Key points

  • Pendal shares are 23.44% higher to $5.53 after the company received a takeover offer from Perpetual
  • The $2.4 billion offer represents an indicative value of $6.23 for every Pendal share based on Friday's closing price
  • The board has begun to assess the indicative proposal and will update the market in due course

The Pendal Group Ltd (ASX: PDL) share price is rocketing on Monday after the company received a $2.4 billion takeover offer.

At the time of writing, the fund manager's shares are up 23.44% to $5.53 apiece.

What the details of the Pendal takeover?

Pendal shares have opened up with a bang as investors digest the company's latest announcement.

In its statement, Pendal advised that it has received a conditional, non-binding indicative proposal from Perpetual Limited (ASX: PPT).

The latter is seeking to acquire 100% of Pendal shares by way of a scheme of arrangement.

According to the details, the indicative proposal is for a consideration of one Perpetual share for every 7.5 Pendal shares.

Furthermore, each Pendal shareholder will receive $1.67 for every Pendal share owned prior to the takeover. This represents an indicative value of $6.23 per Pendal share based on the closing price of Perpetual shares last Friday.

Should the proposed component of the scrip consideration follow through, Pendal shareholders would own approximately 48% of the merged entity.

The indicative value of $6.23 also reflects a 35.4% premium to Pendal's 30-day volume weighted average price up until 31 March.

It's worth noting that the proposal from Perpetual is subject to a number of conditions. These include due diligence, negotiation and execution of transaction documentation, receipt of all regulatory approvals (including ACCC and FIRB), and no adverse material change to Pendal's operations.

However, the Pendal board did note that the indicative proposal has been offered at a time where broader market volatility has disrupted global markets. This relates to recent geopolitical instability and the economic impacts of the ongoing COVID-19 pandemic.

Nonetheless, the board has commenced an assessment of the indicative proposal, taking into account the strategic value of Pendal.

While shareholders don't need to do anything for now, Pendal advised it will update the market as developments occur.

Pendal share price review

Despite surging today, it has been a disappointing 12 months for Pendal shares, falling by almost 15%.

Early last month, the company's shares reached a 52-week low of $4.04 before staging a small rebound of late.

Based on valuation grounds, Pendal commands a market capitalisation of roughly $2.12 billion, with approximately 383 million shares on hand.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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