hold on for a great trustee sector deal

Hold on for a great trustee sector deal

by:Tim Boreham
From:The Australian

IN December your columnist mused that these stalwarts (Equity Trustees (EQT) $16.80; The Trust Company (TRU) $5.25) should execute what Investorfirst analyst Stewart Oldfield dubbed the most compelling transaction left in the junior financial services sector.

Well folks, it's on and it's hostile: the Melbourne-based Equity Trustees is doing the bidding and its larger Sydney counterpart so far is resisting.

EQT has timed its bid astutely, coming before TRU names a successor for chief executive John Atkin. TRU shares had been in a funk since a poor result in October. "People may say it's a bit opportunistic but it's been discussed for some time," EQT chief Robin Burns says.

EQT is offering 33 of its own shares for every 100 TRU shares, implying a $5.28-a-share value for EQT shares, an 11 per cent premium.

This looks light on, but Burns argues that as TRU holders would emerge with 59 per cent of the merged entity, they'll enjoy synergy benefits estimated at $8 million a year.

TRU's main holders are the listed investment firms Milton, AFIC, Mirrabooka Investments and Djerriwarrh Investments.

The latter three also grace the EQT register. Intriguingly, TRU is EQT's biggest holder with a 17 per cent stake, so it's possible that TRU will lob its own offer.

EQT has kindly offered up Burns and its own chairman, ex-National Mutual stalwart Tony Killen, to head the shebang.

Criterion tips the target will negotiate a better offer and TRU love will abound.

Meanwhile, hold both shares for the biggest action in the trustee sector since the great probate form disaster of 1888.

http://www.theaustralian.com.au/business/opinion/hold-on-for-a-great-trustee-sector-deal/story-e6frg9lo-1226583068124