Angus Aitken backs in Soul Patts’ $3b Perpetual bid
Outspoken stockbroker Angus Aitken has thrown his weight behind Washington H. Soul Pattinson’s $3 billion bid for Perpetual, and whacked its investment bankers in the process.
Angus Aitken thinks the Soul Patts deal “makes complete sense”. Janie Barrett
In a note to clients on Tuesday morning, seen by Street Talk, Aitken told his clients to buy Perpetual, saying the deal made “complete sense” and urged the board to engage with Soul Patts.
“What is totally obvious is the current structure of the business isn’t working and needs to come to an end,” he wrote.
“We don’t think IPO/auctions for these divisions get the best result for the shareholders as you might get a person willing to pay slightly more than Souls in cash but you then transfer all that upside to the private equity fund or whoever buys the division and pay a lot of tax.
“Souls gives you the $1 billion of stock that can be $2-3 billion of stock for long-suffering Perpetual shareholders, you get the net debt down from these current high levels and then focus on taking the costs out of the asset management segment that are clearly too high in terms of centralised costs.”
Aitken also doesn’t have much love for Perpetual’s M&A activities over the past few years, saying it has “diluted corporate trust and wealth down in the scale of relevance for Perpetual” while adding to its debt. He thinks Perpetual’s units would be better under Soul Patts, noting it has “massively outperformed Perpetual” over the long term.
“Nobody is going to do well keeping them all under one roof as they are never all going to be re-rated vs the giant asset management assets,” he wrote.
The stockbroker also laid into the Perpetual board and its band of investment bankers, saying: “There’s a huge irony doing a strategic review so soon after a large M&A piece and even stranger is rewarding two of the banks who created no value for PPT shareholders in M&A the last 10 years by using them on the strategic review to unwind that M&A that hasn’t worked.”
The note comes a week after Perpetual rejected Soul Patts’ bid, saying it “materially undervalues” the company’s businesses. The investment conglomerate made the offer to acquire Perpetual and break the funds management business up.
On the same day, Perpetual said its board was exploring a demerger of its asset management unit from its wealth and corporate trust business in an effort to unlock up to $1 billion of value.
Soul Patts is the largest shareholder of Perpetual, with a 9.9 per cent stake.
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