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Equity Trustees makes bid for Trust Company

Samantha Hodge  |  22 Feb 2013Text size  Decrease  Increase  |  

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Samantha Hodge is a journalist with InvestorDaily, a Sterling publication.


Equity Trustees Limited (EQT) has announced its intention to make an off-market takeover offer for all issued shares in The Trust Company Limited (TRU), the firm said in a statement to the Australian Securities Exchange (ASX).

As part of the offer, Equity Trustees plans to offer 33 of its shares for every 100 Trust Company shares valued at $5.28 per share, representing a headline premium of 11.2 per cent.

Based on the offer ratio, the offer is a premium of 13.3 per cent to the average prices for Trust Company and Equity Trustees for the one-month period prior to the announcement of the offer.

"Combining Equity Trustees and Trust Company has been identified as the best available corporate transaction for both companies. We strongly support this view. Discussions between the two companies have been held formally and informally on a number of occasions without success. The offer will provide the opportunity for Trust Company shareholders to decide the matter," Equity Trustees chairman Tony Killen said.

"This is an exceptional opportunity for shareholders in each company. The benefits for each company's investors, many of whom are long -term and very loyal, are highly attractive. Both groups of shareholders will access the upsides that can be realised by the combined group," he said.

He explained that clients and employees are also expected to benefit from being associated with a larger, more diversified organisation with deeper resources, broader scope and a wider range of high-quality services.

The news came as Treasury Group (TRG) announced a 43 per cent increase in net profit after tax (NPAT) to $6 million for the six months ended 31 December 2012.

The key drivers of profit growth were strong performances from RARE Infrastructure (RARE), Investors Mutual Limited (IML) and Celeste Funds Management (Celeste), which more than offset a reduced contribution from Orion Asset Management.

Total funds under management (FUM) also enjoyed a healthy 8 per cent growth over the period to $17 billion, driven by stronger market conditions and funds inflow into RARE, IML and Celeste.

"This was a pleasing result for the company. Encouragingly, the shift in our FUM mix towards higher-margin retail funds is boosting the company's profitability and having a positive effect on overall returns. The increase in the dividend highlights the board's confidence in our financial position and foreseeable operating outlook," Treasury Group chief executive Andrew McGill said.