Perpetual Ltd Shares Fall After Tax Bill Announcement

Shares of Perpetual Ltd (ASX:PPT) experienced a sharp decline on Tuesday after the Australian fund manager indicated a significant tax burden, which is anticipated to heavily impact shareholder returns from a divestiture deal with KKR & Co LP (NYSE:KKR).

Perpetual’s shares dropped over 7%, reaching A$20.30, briefly marking a near two-month low.

According to the Australian Taxation Office, the KKR deal will incur taxes and duties ranging between A$493 million and A$529 million (approximately $317.3 million – $340.4 million), as stated by Perpetual.

This development reduces the estimated per-share value to between A$5.74 and A$6.42, down from prior estimates of A$8.38 to A$9.82 per share.

The company expressed that it was “extremely disappointed” with the ruling and is engaging with KKR to evaluate the potential consequences of the increased tax amount.

Additionally, Perpetual noted that the ATO has classified the proceeds of the deal as an assessable unfranked dividend for shareholders, resulting in taxation at the applicable rate.

Perpetual and KKR announced their agreement in May this year, under which KKR intended to acquire Perpetual’s wealth management and corporate trust business for A$2.18 billion.