“Our board has a constant duty to act in the best interests of shareholders, and as we go through this dynamic period of time - the market’s moving, lots of moving pieces - they’re going to continue to reference that provision and continue to ask ourselves, are we acting in the best interests of our shareholders?”

Pendal, in contrast, believes Perpetual’s scheme of arrangement to buy the company should be honoured.

The two sides faced off in a court hearing on Friday, in what would normally be a procedural matter.

Perpetual’s share price has been on a tear, since the bid from Regal first emerged, jumping almost 20 per cent since the sweetened second bid emerged on Thursday. Meanwhile, Pendal share price has slumped close to 10 per cent on the back of the interest in Perpetual.

Perpetual shares climbed another 4.2 per cent to $34.80 on Friday, implying some traders are betting Regal will raise its offer again. Pendal shares also rallied 7.4 per cent to $4.20.

UBS analysts on Friday said market pricing implied only a 20 per cent chance of the merger between Pendal and Perpetual closing.

However, Adams said some share price movements since the Pendal-Perpetual deal was announced were the result of “merger arbitrage” trading. “There’s a lot of noise in the stock, in both stocks, right now,” he said.

The UBS analysts added Perpetual’s comments this week indicated its board was not locked into the Pendal deal, if a higher offer emerged for Perpetual.

“Notwithstanding the lack of board support for the consortium’s offer, PPT has highlighted its pathway out of the Pendal merger which would be on fiduciary grounds, which we interpret as conditional on a materially higher bid for a Perpetual control transaction emerging,” they said.

CLSA analyst Ed Henning said the latest bid from the Regal consortium was “opportunistic” and for Perpetual to walk away from the Pendal merger, the offer would need to be “extremely attractive” and close to $40.

“We acknowledge there seems to be momentum gathering for PPT acquirers, although the current bid is some way off from where we believe a deal could be done,” Henning wrote.

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