Perpetual to Pursue Wealth Management Sale, Rejects KKR Deal

Perpetual, an Australian financial company, has announced its decision to terminate the scheme of arrangement with KKR, a U.S. buyout firm, and pursue the sale of its wealth management business separately. The company's board withdrew support for the sale of its corporate trust and wealth management businesses after an independent report concluded that the deal was not in the best interests of shareholders. Perpetual will now focus on retaining its high-quality businesses and advancing its 2024 strategic review.

The proposed acquisition by KKR was valued at around A$2.18 billion (US$1.44 billion), but Perpetual's board determined that the revised proposals were not in the best interests of shareholders. The company has engaged extensively with KKR since the Australian Taxation Office (ATO) provided feedback on the transaction, including on revised non-binding indicative proposals received from KKR. However, no alternative transaction was agreed upon, and the board decided to end discussions.

Perpetual's CEO and managing director, Bernard Reilly, stated that the company's conviction in the quality, performance, and growth opportunities across all of its businesses has only increased since he joined in September 2024. By retaining and focusing on these businesses, Perpetual aims to deliver better returns in the long term. The company will use the proceeds from the planned sale of its wealth management business to strengthen its capital position and support investment in organic growth across its existing corporate trust and asset management arms.

The decision to reject the KKR deal and pursue a separate sale of the wealth management business is expected to have several impacts on Perpetual's long-term financial projections and shareholder value. By retaining its corporate trust and wealth management businesses, Perpetual aims to maximize long-term shareholder value and maintain earnings diversification in the near term. The sale of the wealth management business will allow Perpetual to pay down debt, invest in its core businesses, and improve its financial position. Additionally, the company is committed to implementing a new operating model for its asset management segment and delivering an improved cost reduction program, which could lead to long-term savings and improved financial performance.

In conclusion, Perpetual's decision to reject the KKR deal and pursue a separate sale of its wealth management business is a strategic move aimed at maximizing long-term shareholder value and improving the company's financial position. By retaining its high-quality businesses and advancing its strategic review, Perpetual aims to deliver better returns and create value for its shareholders in the long term.