Link Administration accepts lower takeover bid from Dye & Durham

Link Administration has struck 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.

Link chief executive Vivek Bhatia: ‘Dye & Durham is a global tech company operating in three continents and has had a lot of strength in growth through acquisitions, and Link gives it diversity of revenue and earnings.’

Link Administration has struck 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, which requires approval from competition regulators and shareholders, values Link at $300m less than what Dye & Durham had initially offered late last year.

Link chief executive Vivek Bhatia told The Australian that the two companies were good partners and had a strong rationale for the tie-up.

“Dye & Durham is a global tech company operating in three continents and has had a lot of strength in growth through acquisitions, and Link gives it diversity of revenue and earnings,” Mr Bhatia said.

That could be critical in current market conditions, given the Nasdaq has dropped 40 per cent this year and Dye & Durham’s own share price has slid more than 50 per cent as part of the wholesale shift away from technology companies.

Conditions in equity and debt markets have shifted dramatically since Dye & Durham made their first bid seven months ago, with equity markets falling and the cost of debt rising.

Link’s share price rose 12.6 per cent to close at $4.46 on Thursday, which is still a 20 per cent drop for the year to date.

The accepted buyout proposal is the fourth for Link in two years. Global private equity giant ­Carlyle Group, Australia’s Pacific Equity Partners and SS&C Technologies have taken a look at its books.

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

The Toronto-listed Dye & Durham has operations in ­Canada, Australia, Britain and Ireland.

The Link takeover is by no means a fait accompli, however. The two companies still need to convince the Australian Competition & Consumer Commission that the bid should proceed after the regulator last month outlined “significant preliminary competition concerns”.

The watchdog’s concerns 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 provides information broking services, conveyancing and legal practice management software and manual property settlement services.

Dye & Durham has remained tight-lipped about whether it will sell either the PEXA shareholding or the GlobalX and SAI Global businesses that the Canadian acquired in recent years to expand its Australian footprint.

This would explain why it increased its offer for Link to the now-agreed $4.81 per share, which is below the $5.50 it first offered before withdrawing its bid last year, but above the most recent offer of $4.57.

The offer will now be put to shareholders for a vote through a scheme of arrangement at a date to be determined in August.

Independent expert Deloitte has said Link had an underlying value of between $4.81 and $5.97 a share. It’s understood that Link’s key shareholders have been approached and are amenable to the takeover proceeding at the new $4.81 per share offer.

The ACCC is expected to announce its findings on the takeover in early September.

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