A NSW Supreme Court ruling has made it harder for potential bidders to make a play for Perpetual, in a decision that means the fund manager could face stiff penalties if it walks away from a plan to buy out rival Pendal.

Perpetual shares dropped 12.6 per cent to $27.59 on Thursday, as the market came to the view it was less likely that there would be a further offer for the company after last week’s $33-a-share bid from hedge fund Regal Partners, which was rejected. Pendal shares surged 10.5 per cent to $4.93.

Perpetual first announced plans to buy Pendal in August, but the deal has attracted scepticism in markets. In recent weeks the merger has been thrown into doubt after hedge fund Regal and a private equity firm launched a bid to buy Perpetual for $33 a share.

Regal’s interest sparked claims that Perpetual was in play and Perpetual shares surged last week, amid speculation it could dump the Pendal deal if a more attractive offer emerged.

But on Thursday, the court ruled that Perpetual’s costs from walking away from its tie-up with Pendal were not capped at $23 million, as Pendal could also take other legal action. Perpetual and Pendal also announced new terms for their merger.

After a dramatic week for the two fund managers, analysts said it now looked likely Perpetual would complete its merger with Pendal, as potential bidders for Perpetual could be deterred by the legal complications, and the need to fork out more than $33-a-share offered by Regal.

Morningstar analyst Shaun Ler said he thought potential bidders for Perpetual would probably think twice after the court ruling, but there was still market scepticism towards Perpetual deal with Pendal.

“The big picture is this does not solve Perpetual’s problem. The board is still under pressure to realise shareholder value,” Ler said.

CLSA analyst Ed Henning said he continued to lean towards the Perpetual-Pendal deal being completed.