‘Significant concerns’: $3b takeover of Aussie giant in jeopardy as ACCC spooks investors

A $3 billion takeover of Australian administration services giant Link is in jeopardy after the competition watchdog raised “significant concerns” the deal could impact all property transactions in Australia.

The Australian Competition and Consumer Commission said on Thursday that Canadian group Dye & Durham’s takeover of Link raised competition concerns in the property conveyancing sector given Link’s ownership of a large stake in PEXA, an online property settlement platform.

Dye & Durham also provides conveyancing and legal practice software and manual property settlement services in Australia and the ACCC said the tie up could give Dye & Durham significant control over the market, possibly leading to higher prices for Australians selling or buying property.

The ACCC said on Thursday that Dye & Durham’s $3 billion takeover of Link raised competition concerns in the property conveyancing sector given Link’s ownership of a large stake in PEXA, an online property settlement platform. Credit: Peter Rae

“Consumers may not be familiar with these companies in name, however this acquisition is relevant to anyone buying or selling property,” ACCC deputy chair Mick Keogh said. Link owns 42.77 per cent of PEXA.

“We have significant preliminary concerns that this transaction would enable D&D and PEXA to engage in mutual preferential dealing that would hinder existing competition or raise barriers to entry in one or more markets in the conveyancing workflow,” Keogh said.

Link’s shares closed sharply lower, falling 10.4 per cent to $3.35, as investors fled over concerns Dye & Durham may pull its bid or lower its offer in the wake of the ACCC’s concerns.

Link’s takeover deal with Dye & Durham is already the final stages and regulatory clearance from the ACCC was a key hurdle the deal needed to clear. It’s the fourth takeover offer that Link has received in recent years. Other suitors, notably Private Equity Partners have been scared off by the threat of a class action in the UK.

“Consumers may not be familiar with these companies in name, however this acquisition is relevant to anyone buying or selling property.”

ACCC deputy chair Mick Keogh

On Monday, Link confirmed the long-awaited class action had now been filed in the United Kingdom on behalf of investors. The group said it would vigorously defend the claim brought against it by investors in a scandal-plague fund that has chalked up £1 billion ($1.75 billion) in investment losses.

The superannuation fund administrator and share registry operator told investors on Thursday that it expected to soon be served with the action that relates to the freezing of a £3.7 billion investment fund that has around 300,000 investors.

The Link-administered fund, the LF Equity Income Fund (previously the Woodford Equity Income Fund) has been beset with scandal after it suspended in 2019 and investor funds were frozen from withdrawals after being unable to meet redemption requests. The Financial Times has described the fallout as “the biggest British investment scandal in a decade”.

The fund is estimated to have lost more than £1 billion in value since being frozen.

Two law firms in the UK, Harcus Parker and Leigh Day, have joined forces to lodge the claim against Link.

The action alleges the fund breached its requirements to have enough liquid assets to be able to meet requests from investors to withdraw funds. Instead, the fund invested in investments that were illiquid, or could not be readily sold to meet investor redemption requests.

“Hundreds of thousands of ordinary people have lost significant amounts of their life savings investing in this fund. We contend this is a direct result of Link’s mismanagement,” Leigh Day solicitor Meriel Hodgson-Teall said.

The firm’s experts have predicted that investors may lose 40-50 per cent of the value of their investment.

Harcus Parker in its messaging to claimants pointed to the difficulty in the fund being able to sell its assets.

“The difficulty the administrators have had in selling the fund’s assets calls into question how much they were really worth in the first place and whether investors received value for their money,” the firm said.

“Woodford and Link made tens of millions in profit from the management of the Fund. Investors have been left with the consequences of their decisions.”

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