The Match Out: Stocks edge higher, Perpetual (PPT) makes play for Pendal (PDL)

James Gerrish

Market Matters

A fairly flat session to start the week with little direction at the index level although there were some decent moves under the hood. The fund managers were in focus following a takeover approach while the Utilities, Materials & IT stocks all finished up around 1%.

  • The S&P/ASX 200 added +19points / +0.27% to close at 7513.
  • Utilities (+1.08%) & Materials (+0.98%) led the line (just) while the retailers (-0.86%) struggled.
  • Perpetual (PPT) -6.06% made a play for Pendal Group (PDL) +18.08% in a mostly scrip deal that looks more like a merger of equals.
  • Iluka (ILU) +6.08% rallied on news that it would build a rare-earths refinery in WA.
  • Magellan (MFG) +9.71% on positive read-through from PDL plus bonus option issue Ex-date is approaching (6th April).
  • Iron ore futures were up around 1% today, Coal Futures were flat.
  • Gold was also flat at US$1926 at our close.
  • Asian markets were higher, Japan up +0.47%, Hong Kong up +1.96% & China up +1.06%.
  • US Futures are all up a touch – only smalls.

ASX200

Pendal (PDL) $5.29

PDL +18.08% - the fund manager received a takeover bid from competitor Perpetual (PPT) which sent the stock surging today. Perpetual’s non-binding indicative bid offered 1 PPT share for every 7.5 PDL, as well as $1.67/share in cash, which was a 39% premium based on where both shares closed on Friday, though it only takes it back to where Pendal was trading in November last year. While framed as a takeover, Pendal shareholders would end up with 48% of the company in what looks to be more of a merger of near equals.

Fund managers as a whole have been under pressure from a share price perspective but Perpetual has largely outperformed, likely due to its move diversified business that includes private advice and corporate trust arms supporting the valuation. Pendal seemed defensive in their response, and rightly so. The bid has no premium to the 180-day weighted average price and comes at a time when global assets and their managers are dealing with plenty of volatility, they wouldn’t want to give Perpetual a look under the hood without more concrete guarantees.

Broker Moves

  • Abacus Property Raised to Outperform at Macquarie; PT A$3.65
  • Northern Star Cut to Neutral at JPMorgan; PT A$11.50
  • Evolution Cut to Neutral at JPMorgan; PT A$4.90
  • Pilbara Minerals Raised to Overweight at JPMorgan; PT A$4.50
  • Lovisa Rated New Overweight at Barrenjoey; PT A$22.30
  • Mineral Resources Raised to Neutral at JPMorgan; PT A$59
  • Bank of Queensland Cut to Neutral at JPMorgan; PT A$8.90
  • Sims Cut to Neutral at UBS; PT A$22
  • SiteMinder Ltd Rated New Neutral at Citi; PT A$5
  • F&P Healthcare Rated New Underweight at Barrenjoey; PT NZ$24.50

Major Movers Today

Enjoy your night
The Market Matters Team

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James Gerrish
Portfolio Manager
Market Matters

James is Portfolio Manager & Primary Author at Market Matters, a daily investment report with over 2500 subscribers that offers real market insight. He is also Senior Portfolio Manager within Shaw and Partners heading up a team that manages...

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