Platinum Asset Management Ltd (ASX: PTM) shares are charging higher on Thursday.
In morning trade, the ASX 300 asset management stock was up almost 16% to 66 cents.
Investors have been fighting to get hold of the company's shares today after it confirmed that it is in early-stage merger talks with L1 Capital. It is a private investment firm with global reach.
If successful, the release notes that the deal would create an investment powerhouse with approximately $18 billion in funds under management.
According to the release, the two parties are in non-binding discussions regarding a potential merger that would see Platinum acquire L1 in exchange for issuing new Platinum shares.
Under the indicative terms, L1 Capital shareholders would end up owning around 75% of the merged group, with existing Platinum shareholders retaining around 25%.
Management highlights that the merger aims to combine two complementary investment managers, offering greater scale, a broader suite of investment strategies, and potential cost efficiencies. It believes the deal could deliver meaningful earnings and value accretion to shareholders.
However, it was quick to stress that discussions are still preliminary, and a deal remains subject to due diligence, binding documentation, board approvals, shareholder approval, and regulatory sign-off.
The ASX 300 stock's CEO, Jeff Peters, said:
L1 Capital is a first-class manager with a strong investment track record. The Potential Merger provides an attractive opportunity to combine expertise and resources, and we will continue to explore if it's in the best interests of Platinum shareholders.
It is also worth noting that L1 Capital has acquired a 9.6% stake in Platinum from co-founder Kerr Neilson, who has also granted L1 a call option over part of his remaining shares. If exercised under specific conditions, this would take L1 Capital's stake to 19.9%.
In response to the news, Platinum said:
Platinum welcomes L1 Capital to the register and looks forward to working with L1 Capital as a major shareholder in Platinum irrespective of the outcome of the Potential Merger discussions referred to above.
Investors appear positive on a deal that could reshape the ASX 300 stock's future and boost its earnings outlook.
However, there's still a lot of hoops to jump through until that happens. Platinum has promised to keep the market informed in line with its disclosure obligations. Until then, all eyes will be on how the discussions progress — and whether this is the beginning of a major shake-up in the Australian funds management space.
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