Article in the Australian (17 Feb 2025):

Perpetual weighs revised KKR proposal for Corporate Trust and Wealth Management units

Bridget Carter

15 hours ago.

Updated 3 minutes ago

The Australian Business Network

1 Comment

Perpetual shares closed almost 2 per cent higher on Friday at $23.32, and with a rally over the past month, the market is betting on a positive outcome.

Perpetual’s negotiations over the sale of its corporate trust and wealth management units to Kohlberg Kravis Roberts could be close to ending, as KKR put forward an improved proposal at the weekend.

The listed financial group confirmed in a statement to the market on Monday that it had received a revised proposal from KKR, but says it “contemplates outstanding commercial terms that would need to be agreed”.

It adds that the net proceeds shareholders would receive under the revised proposal were uncertain at this stage.

The board was assessing the revised proposal and its associated terms, Perpetual said in a statement.

One theory had been that KKR buys all of Perpetual to get around onerous tax liabilities, and breaks up the business later.

But the understanding is that on the table is a sweetened deal for Corporate Trust and Wealth Management.

DataRoom understands that the proposal offered additional franking credits, which could take the value of the proposal to $11 per share, or $1.26bn excluding debt.

Perpetual shares closed almost 2 per cent higher on Friday at $23.32, and with a rally over the past month, the market is betting on a positive outcome and on Monday were trading steady in early Monday morning market trade.

KKR last year agreed to buy Perpetual’s Corporate Trust business for $2.2bn, but the Australian Taxation Office issued a ruling that the tax liability would be $493m to $529m, higher than the $106m to $227m anticipated.

As a result, shareholders would receive far less in proceeds – between $5.74 and $6.42 per share rather than $8.38 to $9.82.

Corporate trust funds under administration rose 2.5 per cent over the December quarter to $1.25 trillion.

Wealth Management funds under advice rose 1 per cent to $20.6bn, driven by positive market movements.