Perpetual updates on KKR acquisition scheme

Perpetual (ASX:PPT) has announced an update regarding its proposed acquisition by KKR of its Wealth Management and Corporate Trust businesses. The Australian Taxation Office (ATO) has assessed that section 45B of the Income Tax Assessment Act of 1936 applies to this scheme. This could classify the cash proceeds as an assessable unfranked dividend for shareholders, significantly affecting tax liabilities. The company is disputing this assessment while working with KKR to evaluate the impact on the transaction.

Summary of Perpetual's strategic update

Perpetual has provided an important update on the proposed acquisition of its Wealth Management and Corporate Trust businesses by KKR. The ATO's assessment that the transaction's proceeds may be classified as an unfranked dividend poses substantial tax implications for shareholders, potentially reducing their cash proceeds. Perpetual is contesting this assessment and is in discussions with KKR to assess its impact on the deal. Despite these challenges, Perpetual's business segments have shown growth in the first quarter of FY25, with notable increases in assets under management and funds under advice. The company remains focused on its internal separation program to establish independent business units, while also pursuing cost reduction and simplification initiatives. Advisors such as BofA Securities, Goldman Sachs, and others are supporting Perpetual in this strategic transition. The company is committed to enhancing shareholder value amidst evolving regulatory conditions.

Executive commentary on tax implications

The ATO's position significantly impacts the scheme and the expected cash proceeds to our shareholders. We strongly disagree with this assessment and are committed to disputing the ATO's position. Our focus remains on ensuring the best outcomes for our shareholders and stakeholders as we navigate these challenges.