The Pendal Group Ltd (ASX: PDL) share price jumped 15% in morning trade as investors reacted to the news that the takeover by Perpetual Limited (ASX: PPT) is going ahead.
At the time of writing, the Pendal share price has retreated a little to $5.33, up 9.2%.
Investors have sent the Perpetual share price down in response — it's currently in the red by 8.2%.
The two investment managers have agreed to a deal after "extensive engagement" between them.
What's the acquisition price?
The fund manager revealed that Perpetual offered more for Pendal.
The takeover deal is priced at one Perpetual share for every 7.5 Pendal shares, plus $1.976 cash for each Pendal share. The offer will be reduced by the amount of any final dividend paid to Pendal shareholders for the six months to 30 September 2022.
Pendal outlined that this offer has an implied undisturbed value of $6.54 per Pendal share based on Perpetual's closing share price on 1 April 2022. That was the last trading day before Pendal announced receipt of the offer on 4 April 2022. That value of $6.54 represented a 46% premium to the Pendal closing price on 1 April 2022.
Based on Perpetual's closing price on 24 August 2022, the offer has an implied value of $6.016 per Pendal share. This represents a 23.3% premium to Pendal's closing share price.
Pendal shareholders will own approximately 47% of the combined group. Up to three Pendal directors will join the Perpetual board after the implementation of the deal.
The Pendal board unanimously support the offer. It also has the "strong support" of the investment teams. There has been a commitment from Perpetual to preserve the "culture of investment independence".
Why is this a good thing for shareholders?
Pendal chair Deborah Page wrote this in a letter to shareholders:
If the scheme is approved by you, our shareholders, the proposed transaction will see two iconic financial services firms brought together to create Australia's pre-eminent global asset manager, with combined funds under management of $201 billion.
We believe this is a compelling opportunity for shareholders and the business alike. The combination will deliver a significant increase in scale, boost our position in an increasingly competitive global market and bring strategic benefits in the dynamic sectors in which we operate, both domestically and internationally.
Furthermore, the combined company, through its multi-brand strategy, culture of investment independence, expanded distribution network and enhanced sustainable and impact investing capability, will be well positioned to deliver long-term shareholder value.
What next for Pendal shares?
Pendal said shareholders did not need to take any action at this stage.
Shareholders will receive a booklet ahead of the meeting at which they will vote on the takeover. Pendal expects to hold the meeting either in December 2022 or early 2023. The timing will depend on when they receive regulatory approvals and the consent of clients.
Pendal share price snapshot
Despite today's rise, Pendal is still down by 8% in 2022 to date.
