Nov 17 (Reuters) - An Australian court said on Thursday fund manager Pendal Group Ltd could enforce buyer and larger rival Perpetual Ltd to honour their A$2.34 billion ($1.58 billion) deal.

Shares of Perpetual fell as much as 19.5% to hit the bottom of the Australian benchmark stock index and were on track for their worst session since January 1995, while Pendal shares jumped 9.6% to touch their highest level in two weeks.

Perpetual has also been a takeover target of EQT-owned Barings Private Equity Asia (BPEA) and Regal Partners, which raised their offer earlier this month to buy the fund manager for A$1.85 billion. Perpetual rejected the improved offer, saying it undervalued the company.

Perpetual sought to defer the hearing at the New South Wales Supreme Court, saying it would be obliged to pay a break fee of A$23 million to Pendal if it was unable to proceed with the deal.

"The court declared that the payment of A$23 million, should the Perpetual board seek to exercise its fiduciary carve out in the SID (scheme implementation deed), does not exclude Pendal's right to seek specific performance or injunctive relief," Perpetual said.

"This is the case even if the Perpetual board determines that it is in the best interests of its shareholders for Perpetual to do so."

In a separate statement, Pendal said the court declared that the payment was not an exclusive remedy, meaning it would be open to Pendal seeking orders to enforce Perpetual's obligations to complete the scheme.

"The Pendal board continues to unanimously recommend shareholders vote in favour of the scheme in the absence of a superior proposal," Pendal added.

Earlier in the day, Perpetual and Pendal agreed to tweak the structure of their deal by reducing the cash component and hiking the stock component.

Perpetual will retain a majority ownership of the combined group with the deal expected to remain double-digit earnings-per-share accretive to its shareholders in the first 12 months after completion. ($1 = 1.4837 Australian dollars) (Reporting by Roushni Nair in Bengaluru; Editing by Krishna Chandra Eluri and Subhranshu Sahu)