Investing.com– Shares of Perpetual Ltd (ASX:PPT) fell sharply on Tuesday after the Australian fund manager flagged a massive tax bill that is expected to severely crimp shareholder returns from divestiture deal with KKR & Co LP (NYSE:KKR).
Perpetual’s shares slid over 7% to A$20.30, briefly hitting a near two-month low.
The Australian Taxation Office said the KKR deal will be subject to taxes and duties of between A$493 million and A$529 million ($317.3 million- $340.4 million), Perpetual said in a statement.
This will bring down the per-share value to between A$5.74 and A$6.42 a share from previous estimates of A$8.38 to A$9.82 per share.
The company said it was “extremely disappointed” with the ruling and was engaging with KKR to consider the potential impact of the higher tax amount.
Perpetual said the ATO had ruled that the proceeds of the deal were deemed to be an assessable unfranked dividend for shareholders, and will be taxed at an applicable rate.
Perpetual and KKR had announced the deal in May this year, under which KKR planned to acquire Perpetual’s wealth management and corporate trust business for A$2.18 billion.