Australia’s Perpetual has officially ended discussions with private equity firm KKR over the AUD2.2bn ($1.4bn) sale of its wealth management and corporate trust units in the company and is now planning a separate sale of its wealth management business, according to a report by Reuters.
Perpetual’s shares dropped nearly 4% on Monday following the announcement, underperforming the broader S&P/ASX 200 index, which remained flat.
The deal, initially agreed upon last May, was deemed not in shareholders’ best interests, Perpetual said on Monday, citing an independent expert’s report. This aligns with the company’s prior warning in December after a tax ruling indicated potential financial drawbacks.
Perpetual disclosed that the AUD21m break fee associated with the terminated deal is now under dispute, stating it has no intention of making the payment. KKR, in response, reserved the right to seek further damages but declined to comment on the collapse of the negotiations.
With talks with KKR now over, Perpetual will move forward with selling its wealth management unit. CEO Bernard Reilly told Reuters that the company expects significant interest from potential buyers.
The Australian wealth management sector has seen heightened dealmaking activity, with superannuation and wealth firm Insignia at the centre of a $1.9bn bidding war involving CC Capital Partners, Bain Capital, and Brookfield.
The deal with KKR had been on hold for two months after Perpetual received a ruling from the Australian Taxation Office that significantly increased its expected tax liabilities. The company estimated the tax implications would reduce cash proceeds from the deal to between AUD5.74 and AUD6.42 per share, down from the previous range of AUD8.38 to AUD9.82 per share.
Last week, Perpetual confirmed that KKR had submitted a revised proposal, though it did not disclose the bid’s value. However, local media reports suggested KKR had adjusted its offer to AUD8 per share.
