“Before embarking on the next round of discussions with Trust Company, Equity Trustees requires comfort that your Board considers there is a reasonable prospect of Equity Trustees acquiring Trust Company, including that the Board of Trust Company would consider recommending our improved offer to your shareholders,” EQT chairman Tony Killen wrote in a letter to the group posted on the ASX website.
Mr Killen noted TRU continues to recommend a competing offer from Perpetual (PPT), meaning there is a significant risk that TRU’s proposed negotiation process “will be an unnecessary and fruitless exercise for all concerned”.
EQT recently stated it believed derived synergies from the merger would be in the order of $15 million, leading TRU to commission an independent analysis from Ernst & Young (EY) – which estimated synergies from an EQT acquisition of around $7.5, while a Perpetual takeover would result in $14 to $15 million in synergies.
However, Mr Killen said his group remained confident their estimate was accurate and requested access to the EY report.
He added that without the requested assurances it would be difficult for EQT to provide TRU with sensitive information to the extent it had requested as part of the process.
“As a result, we ask that you refine your proposed list to refocus it on a smaller number of key items that are material to Trust Company’s decision making and associated shareholder consideration,” Mr Killen said.
He also requested reciprocal due diligence, rather than the one-way process proposed by TRU.
Mr Killen reiterated the view that a merger between TRU and EQT is the best option for shareholders of both companies.
“I look forward to receiving your response on all the matters outlined in this letter, including your assurances on the process for fairly dealing with Equity Trustees, the EY Report (redacted as appropriate), a revised information request list and a confidentiality agreement to facilitate the reciprocal due diligence process,” he wrote.
PPT’s bid is currently being examined by the Australian Competition and Consumer Commission, which expects to provide an update on the matter by August 1.
