Pendal share price slides amid 'potential transaction'

In the past 12 months, Pendal shares have fallen by 44%.

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Key points

  • Pendal shares edge 1.53% lower to $4.36 during early morning trade
  • Management revealed that it's in high-level, preliminary discussions with Perpetual regarding a possible acquisition
  • Pendal shares hit a 52-week low of $3.69 last week following a disappointing FUM update

The Pendal Group Ltd (ASX: PDL) share price is heading south today.

This follows the company's announcement late yesterday regarding a 'potential transaction'.

At the time of writing, the fund manager's shares are swapping hands at $4.36, down 1.53%.

Let's take a look at what was released to the market.

Pendal in high-level discussions about possible acquisition

In its statement, Pendal advised that it is in talks with Perpetual Limited (ASX: PPT) about a possible acquisition. 

It noted that the meetings are highly confidential and preliminary, and do not guarantee that a transaction will take place.

The Pendal board will keep shareholders informed in accordance with its continuous disclosure obligations.

Earlier in April, Perpetual made a $2.4 billion non-binding offer to take over Pendal.

The $6.23 per share offer, which represented a 35.4% premium at the time, was deemed not in the best interests of Pendal shareholders.

Eventually, the deal fell through.

As reported by The Australian, if the arrangement is on the same terms, then this would value Pendal shares at $5.58 apiece.

Last week, Pendal provided an update on its funds under management (FUM) for the quarter ending 30 June 2022.

The performance wasn't rosy and led its shares to hit a 52-week low of $3.69 on the day.

Pendal CEO Nick Good touched on the disappointing performance, saying:

During the quarter there have been sustained market challenges. Global equity market volatility increased dramatically with rising inflation worries, ongoing concerns over geopolitical tensions, and fears of economic recession around the world due to aggressive tightening measures by major central banks.

As a result of current market conditions, we remain prudent and flexible in managing costs, focusing on building and strengthening our strategic growth areas…

Pendal share price snapshot

In the past 12 months, Pendal shares have continued to be sold off by investors to fall 44%.

When looking at year to date, its shares have lagged the S&P/ASX 200 Financials Index (ASX: XFJ) – down 20% vs. 8.5%, respectively.

Pendal has a price-to-earnings (P/E) ratio of 7.92 and commands a market capitalisation of roughly $1.69 billion.

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 Scott Phillips.

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