D-day looms for Regal, Platinum merger | Beck clears the deck at Leap Legal | Symal IPO priced

Good evening,

Time’s nearly up for Phil King’s look at the books of the $687 million Platinum Asset Management, the global equities investing pioneer which has shrunk to a mere shadow of its former self.

Sources said Regal’s mutual due diligence period, granted by Platinum’s Guy Strapp-chaired board on around October 4 to an undisclosed deadline, is due to expire over the coming days. Street Talk understands Strapp has called a board meeting after Friday’s closing bell, presumably to pre-empt Regal’s next move and prepare its response.

Regal has a couple of options on the table. It can bump up its mid-September scrip bid, which was deemed too low by the target board or rejig the structure to kick in some cash. It could also walk away, or kick the can down the road and ask for a due diligence extension.

As of Thursday evening, it was unclear how King would play his cards. Platinum’s stock, down 4.17 per cent over the past five days, suggests investors have low confidence in the deal getting through.

There’s no denying the two companies could happily go their own ways. Platinum’s board could continue backing its new CEO Jeff Peters’ turnaround plan, and Regal could go hunting for other targets armed with its shares which have risen more than 40 per cent this year.

Yet, there’s strategic rationale to putting the two together, even if under a scrip-only offer. Platinum shareholders have sat through several years of broken promises on better returns, why not swap their shares for a fund manager where things do seem to be ticking along nicely?

Further, Strapp’s decision to open the books to Regal on a non-exclusive basis doesn’t seem to have shaken out any rival bidders so far despite veteran fund manager Geoff Wilson’s interest. For Regal’s, there’s not many Platinum-sized fund managers on the ASX to buy – not counting Pacific Current Group and Perpetual where it once tried its hand.

In the background are two founders, with sharply contrasting personalities but a similar problem of having a chunk of their personal wealth tied up in their companies’ stock.

A combined, bigger business would have better index representation and re-rating potential, should either Kerr Neilson or King wish to sell after the deal, sources said.

Read the full story tomorrow and more on the Street Talk page.

HMC Capital’s digital infrastructure ambition has it homing in on the $1.93 billion Chinese-owned Global Switch Australia, where getting its Sydney data centres back into the government’s good books will be crucial to unlocking value.

Click here for the latest equity market wrap.