In today’s briefing:
- Pendal Group (PDL AU): Perpetual’s Bump Should Get the Deal Done
- Ramsay’s Overdue Update on the KKR Proposal
- Pendal Enters Scheme With Perpetual
- Pendal Gets a Binding Offer from Perpetual
- I Squared/FirstGroup: Why Have the Negotiations Ended?
- STOXX Europe Quiddity Leaderboard Sep 2022: 11 ADDs/DELs, Sandvik-Alleima, and More
Pendal Group (PDL AU): Perpetual’s Bump Should Get the Deal Done
- Pendal Group and Perpetual Ltd have entered into a SID where Pendal shareholders will receive 1 share of Perpetual for every 7.5 shares in Pendal, plus cash of A$1.976/share.
- While this is a premium to the last close and undisturbed prices, it is a discount to longer term prices. The Pendal Board has unanimously recommended the offer though.
- In the short-term expect short covering on Pendal Group (PDL AU) and increased shorts on Perpetual Ltd (PPT AU) as arbs step in to close the gap.
Ramsay’s Overdue Update on the KKR Proposal
- Ramsay Health Care (RHC AU) notes that discussions with KKR are ongoing, but the indicative proposal is held up by due diligence access to Ramsay Generale de Sante (GDS FP).
- KKR proposed an alternative proposal that the Board rejected as “meaningfully inferior.” KKR remains interested, and its shenanigans are likely a move to nudge down the price.
- At the last close, the risk/reward profile is favourable as the downside due to a deal break (-3% estimated decline) is lower than the upside (+20%) to the indicative proposal.
Pendal Enters Scheme With Perpetual
- On the 4 April, asset manager Pendal (PDL AU)‘s board unanimously determined the indicative cash/scrip Offer proposal from Perpetual (PPT AU) undervalued the current and future value of the company.
- Pendal And Perpetual have now entered into a SID such that Pendal shareholders will receive 1 Perpetual share for every 7.5 Pendal shares plus $1.976 cash for each Pendal share.
- The negotiation clincher was the increase in the cash component by A$0.306/share. Should the deal complete, Pendal will hold 47% in the enlarged entity.
Pendal Gets a Binding Offer from Perpetual
- Pendal Group (PDL AU) entered a scheme implementation deed with Perpetual Ltd (PPT AU). The revised offer – scrip (1 Perpetual share for every 7.5 Pendal share) and cash (A$1.976).
- The revised offer throws in an 18.3% higher cash component as a sweetener. The offer implies a healthy acquisition multiple compared to peers.
- The offer is subject to shareholder and regulatory approvals. At the last close price, the gross spread to the current offer value of A$5.635 per share is 13.7%.
I Squared/FirstGroup: Why Have the Negotiations Ended?
- On 16 August, I Squared confirmed it did not intend to make an offer for FirstGroup thus will now be precluded from bidding for six months.
- The 15 August offer implied almost no premium for the core business, significant value not reflected, and a difficult to grasp structure for most investors, in my view.
- A SOTP approach gives a fair value of 183.4p. The board seems right in its refusal. Other bidders may appear or I Squared may return to the negotiating table. Long.
STOXX Europe Quiddity Leaderboard Sep 2022: 11 ADDs/DELs, Sandvik-Alleima, and More
- In this insight, we take a look at the names leading the race to become ADDs/DELs for the STOXX Europe 600 and EURO STOXX Indices for the September 2022 Rebalance.
- Based on current rankings, there could be around 11 ADDs/DELs in the September 2022 Rebalance.
- The completion of the Avast PLC (AVST LN) and Meggitt PLC (MGGT LN) deals could result in intra-review changes in September 2022.
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