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Global equities manager Pendal has rejected a $2.4 billion takeover bid, claiming it under-values ​​the company, before unveiling a $100 million share buy-back and reporting sliding funds under management.

Historic Sydney investment firm Perpetual mounted a bid to fully acquire Pendal’s shares last week for an indicative price of $6.23 per share, in a deal that would create a combined asset manager controlling more than $240 billion.

The offer price was a 40 per cent premium on Pendal’s last trading value, and MST senior analyst Lafitani Sotiriou encouraged Pendal to accept the deal to remedy what he described as poor management led by a “lazy board, detached from reality”.

However, Pendal on Tuesday released a statement to the ASX claiming the board had “unanimously determined that it significantly undervalues ​​the current and future value of Pendal and is therefore not in the best interests of shareholders”.

The proposal represents only a 0.3 per cent premium on the 180-day average of Pendal’s shares and is “materially below” the company’s underlying standalone value, the company said.

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Pendal owns a string of boutique asset managers around the world, which each have independent investment strategies and management teams.

The company highlighted its unique characteristics, including what it described as “the most respected investment talent in the world, with a track record of delivering superior long-term performance”.

“Pendal has brought together a compelling global distribution footprint across the UK, Europe, the US and Australia, the value of which is not adequately recognized in the indicative proposal,” the company said.

Alongside the takeover rejection, Pendal released two separate statements announcing a share buy back and soft funds under management for the quarter.

The $100 million on-market share buy-back is designed to strengthen the company’s share price, Pendal said, after the board recognized the share price destruction.

Pendal’s shares have almost halved since the company was listed on the ASX in 2017, sitting at around $5.30 per share.

The buy-back will be funded from a combination of cash reserves and financial assets and will occur following the half-year financial results scheduled for May 10.

“Pendal is a strong cash generating business with a solid balance sheet, which provides significant flexibility to pursue both growth and capital management initiatives for the benefit of shareholders,” the statement said.

Pendal also reported its funds under management had fallen by $800 million in the three months March 31. Chief executive Nick Good, who was appointed to the role in 2019 to replace longstanding chief executive Emilio Gonzalez, said weak and volatile markets had created a drag on overall funds but highlighted the improvement in flows.

Across Australia and the US, Pendal reported outflows of $500 million and $1.8 billion respectively but saw $700 million in inflows from the Europe, UK and Asia businesses.

Mr Good said the firm had seen “sizeable additional investment” from St James’s Place – the UK fund manager that abruptly ended its major contract with Magellan amid its leadership turmoil.

“Our diversified book of businesses means we are well positioned to offer clients the range of investment strategies they require to meet their changing investment needs,” Mr Good said.

Stockbroking firm Bell Potter released a note to clients last week claiming the proposal made strategic sense. “Walking away, perversely might weaken management, unless they can demonstrate strong results in the next year, and given recent trading, that may be tough.“

Perpetual has been on an acquisition spree, buying US investment firms Barrow Hanley and Trillium Asset Management in recent years, as chief executive Rod Adams seeks to transform the traditionally Australian-stock focused investor into a global powerhouse.

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