Perpetual share price gains as $2b Pendal acquisition officially completed

The ASX 200 giant now commands $200 billion of funds under management.

Key points
  • The Perpetual share price is outperforming on Monday amid news its Pendal takeover has been completed
  • The company will hand Pendal shareholders one Perpetual share and $1.65 cash for every seven stocks they own – valuing Pendal at around $2 billion
  • The ASX 200 asset management business also announced two new directors and updated its earnings guidance

Look out, there's a new asset management giant on the S&P/ASX 200 Index (ASX: XJO). The Perpetual Limited (ASX: PPT) share price is outperforming the broader market today after the company officially completed its mammoth acquisition of Pendal Group Ltd (ASX: PDL).

Perpetual boasts around $200 billion of funds under management following the merger, in which it offered one of its own shares and $1.65 cash for every seven Pendal shares.

The Perpetual share price is up 1.26% right now, trading at $26.53.

For comparison, the ASX 200 is up 0.04% right now at 7,455.3 points.

Let's take a closer look at the latest news from the newly merged ASX 200 financial giant.

The last piece of the jigsaw being fitted, indicating good news for a share price on merger or acquisition

Image source: Getty Images

Perpetual share price outperforms on Monday

It's shaping up to be a bright day for the Perpetual share price as the notably larger company looks to its future.

The completion of its major acquisition sees the company appointing two former Pendal directors to its board.

Kathryn Matthews and Christopher Jones will take a seat at the Perpetual table. Meanwhile, Craig Ueland will retire from the board tomorrow.

Perpetual chair Tony D'Aloisio also commented on the merger of "two of Australia's oldest and most respected active asset management businesses", saying:

Through this transaction we have created a leading global multi boutique asset manager with significant scale, diversified investment strategies, world-class ESG capabilities and a stronger global distribution capability, complemented by Perpetual's high-quality wealth management and trustee businesses.

Perpetual managing director and CEO Rob Adams also flagged "the beginning of an exciting new chapter".

He noted that, so far, 98% of Pendal clients (by revenue) whose consent for the change of control was required have given it.

Perpetual updates earnings guidance

Now, the company will work to realise an expected $60 million of run-rate pre-tax expense synergies.

That's expected to bring a one-off pre-tax cost of around $110 million over the coming 18 months, while transaction costs are tipped to come in at around $40 million.

Next month, Perpetual still expects to post between $65 million and $70 million of underlying profit after tax for the first half.

Its full-year expense growth is also on track to come in at the higher end of its previous guidance.

Further full-year guidance is expected to be released in April.

A long road to get here  

It's been nearly 10 months since Perpetual first put forward a bid for Pendal. And it's been a dramatic ride to get here.

The takeover was first flagged back in April 2022. Then, Perpetual offered one share and $1.67 cash in exchange for 7.5 Pendal shares. That bid was soon rejected by Pendal.

Months later, Perpetual put forward a second bid, offering one share and $1.976 cash for 7.5 Pendal shares. That offer was later changed, though its value stayed put.

Pendal shareholders received one Perpetual share and $1.65 cash for seven stocks. That valued Pendal shares at $6.161 apiece and the company at $2.4 billion as of mid-November.

In the meantime, Perpetual itself became a takeover target. Last year, a consortium bid as high as $33 per share for the asset manager.

Motley Fool contributor Brooke Cooper 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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