Platinum Asset Management Ltd (ASX: PTM) shares are falling on Thursday morning.
In early trade, the fund manager's shares are down 2.5% to $1.09.
This follows the release of an update on the Regal Partners Ltd (ASX: RPL) takeover offer.
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Platinum shares fall on takeover update
As a reminder, last week Regal Partners made an unsolicited, non-binding, and indicative proposal to acquire Platinum via a scheme of arrangement.
Under the Regal Partners proposal, Platinum shareholders would receive 0.274 Regal shares and a fully franked special dividend of $0.20 per Platinum share, paid from its own cash reserves.
Based on the prevailing Regal Partners share price, the proposal had an implied value of $1.10 per share.
Offer rejected
This morning, Platinum board revealed that it has now considered the proposal, including by obtaining advice from its financial and legal advisers.
Unfortunately for Regal Partners, the board has unanimously concluded that the current proposal undervalues Platinum. As a result, it believes it is not in the best interests of shareholders and has determined to reject the proposal in its current form.
A number of reasons were provided for the rejection. This includes its belief that the offer undervalues Platinum based on its turnaround strategy and outlook. It explains:
the Board's assessment of the stand-alone inherent value of Platinum in a change of control context, including with reference to its current turnaround strategy, outlook, planned future growth initiatives and available capital management strategies.
The Board's assessment of the absolute and relative value of the Regal share consideration being proposed, including with reference to the potential benefits and costs of any combination, as well as the share of the merged business that Platinum shareholders would hold if a binding transaction was entered into on the terms of the Regal Proposal.
Is this the end?
Platinum revealed that it would be open to further takeover talks, so it may not be the end of the matter. Though, a much-improved offer will likely need to be tabled by Regal Partners. It said:
The Board remains open to considering control proposals for Platinum from Regal or other third parties, but will only progress any such proposals if they are on terms that deliver and recognise appropriate value for Platinum shareholders.
It remains unclear whether Regal Partners will return with an improved offer. But it wouldn't be surprising if it did. So investor may want to keep an eye out for that in the coming weeks.
