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By Scott Murdoch
(Reuters) - Australia's Perpetual Ltd has terminated talks with KKR for the A$2.2 billion ($1.4 billion) sale of its wealth management and corporate trust units and said it would pursue a sale of its wealth management business separately.
Shares of Perpetual fell 3.5% on Monday, underperforming the broader S&P/ASX200 index, which was down 0.2%.
The deal with KKR, which was initially announced in May last year, was deemed to be not in the best interests of shareholders by an independent expert.
KKR declined to comment on the deal talks ending.
"(The) Board has determined that the value and terms of those revised proposals, including the various conditions included, were not in the best interests of shareholders and discussions have now ended," Perpetual said in a statement.
Perpetual, a fund manager, added it was "determined to pursue a sale of the wealth management business".
Perpetual said the break fee on the deal not going ahead, identified as A$21 million in regulatory filings, was in dispute, and it was not going to pay that sum. It flagged KKR had said it would reserve its right to seek further damages.
The deal with buyout firm KKR for the businesses had been on the back burner over the past two months after Perpetual received a much higher-than-expected tax bill. Perpetual said last week KKR lodged a revised proposal without identifying the value of the bid.
Local media reported KKR had offered A$8 per share.
Perpetual estimated that its tax bill would reduce cash proceeds from the deal to between A$5.74 and A$6.42 apiece from the previously expected range of A$8.38 to A$9.82 apiece.
($1 = 1.5699 Australian dollars)
(This story has been corrected to say that KKR, not Perpetual, had offered A$8 per share, in paragraph 9)
(Reporting by Scott Murdoch in Sydney; additional reporting Roshan Thomas in Bengaluru; editing by Deepa Babington and Sonali Paul)