Dye & Durham offers to sell Australian units to appease ACCC for $2.5bn Link takeover

Canada’s Dye & Durham tells competition watchdog it will sell its Australian units in an effort to win approval for its $2.5bn takeover offer for Link.

Link chairman Michael Carapiet (right ) with then CEO John McMurtrie (left) at the ASX celebrating its listing.

Dye & Durham has offered to sell its existing Australian businesses in order to proceed with its board-approved $2.5bn takeover of Link Administration, in a move to appease the competition regulator.

The watchdog is now seeking views on whether Dye & Durham’s proposed sale of GlobalX and the Australian operations of SAI Global, which it bought for $C$166m ($183m) and $91m respectively, is enough of a concession to approve the Link takeover.

The Australian Competition & Consumer Commission’s “significant” concerns about the takeover relate to the 43 per cent shareholding Link owns in the separately listed PEXA, rather than the tie-up between Link and Dye & ­Durham.

PEXA is Australia’s only fully operational electronic property settlements business, and Dye & Durham – through the businesses it is now proposing to sell – provides information broking services, conveyancing and legal practice management software and manual property settlement services.

“D&D’s proposed divestiture undertaking seeks to address competition concerns by removing the potential vertical integration between D&D and PEXA,” ACCC chair Gina Cass-Gottlieb said on Thursday.

“To accept D&D’s proposed undertaking, we need to be satisfied that it will effectively address all competition concerns but is also structured in a way that can be relied upon to be workable and effective,” she said. “We are seeking views from market participants and other stakeholders as to whether this undertaking will adequately address the competition concerns.”

The agreement would see both of the Dye & Durham businesses sold to a purchaser approved by the ACCC.

Link shares rose 1.8 per cent on Thursday to close at $4.48, which is still below the bid price of $4.81 a share.

The group last month agreed to a $2.5bn deal to sell itself to Dye & Durham – finally ending a six-month pursuit of the ASX-listed provider of superannuation management services.

The final agreement values Link at $300m less than what Dye & Durham had initially offered late last year, before global valuations of technology stocks slumped and the competition regulator outlined its “significant preliminary concerns.”

The takeover requires approval from regulators and shareholders.

Dye & Durham is an acquisitive global tech company operating in three continents. Purchasing Link gives it diversity of revenue and earnings.

ACCC is seeking submissions by August 18 and Link shareholders will vote on the takeover via a scheme of arrangement on August 22nd.

The company’s independent expert has concluded that the lower priced offer by Dye & Durham is “fair and reasonable and therefore in the best interests of Link Group Shareholders,” the company said in a statement earlier this week.

Dye & Durham’s share price has dropped 57 per cent this year as part of the shift away from technology companies and general deterioration of equity markets.

Link is Australia’s biggest provider of services to the superannuation administration industry and also a share registry group.

Dye & Durham will be seeking to finalise the takeover before September 30 when their debt package must be renegotiated.