Thursday 18 January 2018

KKR facing resistance to Pepper buyout over offer price

Stock photo: Reuters
Stock photo: Reuters

Gretchen Friemann

US buyout giant, KKR, has run into headwinds on its AU$657m takeover of the Australian financial services group, Pepper, amid discontent at the offer price among some investors.

The Sydney-based funds manager Perpetual, which holds 14.9c of Pepper, has voiced its opposition to the bid, and has said publicly it intends to vote against the deal unless the private equity firm sweetens the offer.

According to the The Australian newspaper, Perpetual's stance is mirrored by independent shareholders raising doubts about the KKR's ability to secure a 50pc-plus footing in the company.

Under the terms of the bid at least 35pc of shareholders must agree to a scrip option or accept a cash offer of AU$3.60 per share. Pepper's founders, chairman Seamus Dawes, CEO Mike Culhane and CFO Cameron Small, together control 35pc of the company.

But support from the rest of the register remains in doubt.

Pepper has grown a substantial business in Ireland and ranks as one of the principal players in the local loan servicing industry. KKR recently dismissed speculation the takeover will result in a slimming down of the Irish arm, insisting instead that it intends "to further the commitment Pepper Group has shown to date for its business in Ireland and Europe" and help "fulfil its growth potential"

News of the escalating battle over Pepper comes as Irish bank bosses prepare for the latest grilling at the Oireachtas Finance Committee.

Outgoing CEO Richie Boucher will be replaced by Liam McLoughlin in the first hearing on Thursday with the heads of AIB, Permanent TSB and KBC's Irish arm due to appear. Ulster Bank CEO, Gerry Mallon, will take his turn early next month.

Irish Independent

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