Australia-based Perpetual has terminated its “Scheme of Arrangement”” with KKR, following the Independent Expert’s Report which concluded that the scheme is not in the best interests of shareholders.
The board has withdrawn its recommendation of the scheme, and the scheme implementation deed has been terminated without a break fee.
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In April 2024, several private credit funds started negotiations with KKR for a funding deal of over A$800m ($525m)to support their bid for Perpetual’s corporate trust and wealth management units.
Earlier this month, Perpetual received a new proposal for its wealth management and corporate trust businesses from KKR affiliate.
In December 2024, Perpetual announced that an unforeseen tax expense would lower the expected cash from its A$2.2bn ($1.40bn) transaction, potentially decreasing its share price from the initial A$8.38-A$9.82 to A$5.74-A$6.42.
Despite receiving revised non-binding indicative proposals from KKR since the ATO’s feedback in December, no alternative transaction materialised that was favourable to shareholders.
The board believes that shareholder value will be best served by maintaining ownership of its businesses with better market positions.
Perpetual will continue its business separation programme and implement a new operating model for asset management, focusing on organic growth and cost reduction.
In addition to the business separation efforts, Perpetual plans to sell its wealth management division. The sale proceeds are intended to bolster the group’s capital and fund growth in the Corporate Trust and Asset Management sectors.
Perpetual has incurred costs related to the strategic review and separation programme, amounting to $42.6m post-tax for the 12 months to 31 December 2024, and $24.4m post-tax for the six months to the same date.
Perpetual CEO and managing director Bernard Reilly said: “After extensive review of the options available to Perpetual shareholders, we believe this is the right course of action to deliver long-term value for our shareholders.
“My conviction in the quality, performance and growth opportunities across all of our businesses has only increased since I joined Perpetual in September last year.”
