Australia’s Perpetual has pulled the plug on its AUD2.2bn ($1.4bn) deal with KKR over the sale of its wealth management and corporate trust units. 

The company cited an independent expert report and a December tax ruling that raised concerns over potential financial drawbacks for shareholders. Consequently, Perpetual is shifting its focus to a separate sale of its wealth management business.

Following the announcement, Perpetual’s shares dropped nearly 4%, underperforming the broader S&P/ASX 200 index. The company is currently disputing a AUD21m break fee associated with the cancelled deal, while KKR has reserved the right to pursue further damages.

CEO Bernard Reilly told Reuters that the firm expects significant interest from potential buyers for its wealth management unit. This move comes amid heightened dealmaking activity in Australia’s wealth management sector, where competition among major players continues to intensify.

Perpetual’s decision reflects broader market trends, with many companies reassessing their strategic options in response to changing regulatory and tax environments. By abandoning the KKR deal, Perpetual aims to protect shareholder value and capitalise on new opportunities in its core wealth management business.