The revised EQT offer features 37 EQT shares for every 100 TRU shares, as well as matching the special dividend in the Perpetual offer of 22 cents.
While EQT’s second offer was based on access to due diligence, it is rejecting the condition as a result of new synergy appraisals reaching $11, with a potential upside nearing the Perpetual estimate.
“Trust Company has rejected our request to undertake due diligence, potentially denying their shareholders the opportunity of attracting a higher bid,” EQT chairman Tony Killen said.
“Nonetheless we are now dropping this as a condition of improving our offer.
“This is because firstly, we continue to see this as such an attractive opportunity to make material gains in profits and dividends for both sets of shareholders; and secondly, we are reassured by Perpetual’s informed view that at least $15 million of synergy benefits are achievable.”
EQT have said they will not be offering a cash component in the offer as a result of the high recent turnover of TRU shares and attempts to avoid shareholders having to pay capital gains tax.
In addition, EQT has said the Australian Competition and Consumer Commission (ACCC) should not approve TRU’s scheme implementation agreement (SIA) with Perpetual, on the basis that it would “lead to a substantial lessening of competition in the market for Corporate Trustee Services”.
“As TRU owns approximately 13 per cent of EQT, if Perpetual were to be successful, then it would acquire this valuable shareholding,” EQT said in a statement to the Australian Securities Exchange (ASX).
“Control of this strategic holding would further facilitate Perpetual’s ability to dominate that trustee company sector.”
EQT projections, which include future values of synergies per TRU share, place the future value to TRU shareholders at $7.79 as a base estimate against $6.70 in the Perpetual offer.
Mr Killen said the EQT bid provides superior long-term value for TRU shareholders.
“Investors in this industry traditionally seek long-term outcomes, reflected in capital growth and increased dividends overtime,” Mr Killen said.
“The EQT offer provides the prospect of materially better future returns with a lower risk profile than the Perpetual offer, which is more exposed to equity market movements through its large funds management business.”
The ACCC commenced its review on competition issues on 16 May and has proposed to hand down its final decision on 11 July.
EQT said its improved offer is scheduled to close on 31 July but will give condition to extending the deadline based on the release of the ACCC findings.
In a statement to the ASX, TRU said it noted EQT’s revised offer.
“The board of The Trust Company will consider the merits of this revised takeover offer and will announce its intentions in due course.
