Dye & Durham finally reaches $2.5bn buyout deal on Link Group

Link said it had agreed to the offer, which is below its first $5.50 per share approach late last year.

Dye & Durham’s agreed deal to buy Link Administration for $2.47bn has been a long time coming and will be a welcome relief for a number of Link’s shareholders, who have lost patience with the company.

This is following profit downgrades and lacklustre performance, as it is outpaced on the technology front for its services by rivals.

But there’s also likely to be investment bankers across Australia cheering that the deal has been agreed – and not just those from Dye & Durham’s adviser, Barrenjoey – because it probably creates some positive sentiment in the market for further transactions.

Some transactions had paused due to the uncertain trading environment. But ANZ this week got the ball rolling by agreeing to buy Suncorp Bank for $4.9bn and successfully raising $3.5bn of equity (the shortfall bookbuild priced at $21.65, 1c higher than ANZ’s last closing share price of $21.64).

There has also been Pendal and Perpetual trying again to resurrect a merger agreement.

But the telling point about confidence for mergers and acquisitions is likely to come from whether Kohlberg Kravis Roberts comes forward with a binding offer for Ramsay at $88 a share – the price it first put on the table for the hospital owner in April before market volatility set in.

A new offer for Link from Dye & Durham had been expected any day, leaving Link’s banking advisers at UBS and Macquarie on tenterhooks as much as those at Barrenjoey as negotiations unfolded.

While the price is about $300m less than its first offer for the business last year, it is considered to be a good result.

Link said on Thursday it had agreed to the latest $4.81-a-share offer, which is below its first $5.50-a-share approach in December.

But Link shareholders are expected to respond positively to the outcome in a softer market as it closes the chapter on a prolonged saga in which Link has been pursued by suitors.

To recap on Link’s life in the public market, the company was listed by Pacific Equity Partners as a $3bn-plus business in 2015 at $6.37 a share and its shares closed at $7.07 on the first day of trade.

Its shares reached as high as $9 before declining.

In 2020, PEP and The Carlyle Group put forward a $5.20-a-share offer for Link, only for the Link board to rebuff their offer. Then SS&C Technology made a bid that was later withdrawn.

PEP and Carlyle then raised their bid to $5.40 a share, valuing the target at $2.9bn.

But after due diligence, they never came forward with a binding bid.

Link’s directors then opted to demerge its 40 per cent-plus in Property Exchange Australia and, following the listing, retained a 43 per cent stake in the company.

Following that move, private equity returned to the negotiating table, with The Carlyle Group offering $3 cash and a distribution of PEXA shares, valuing the group at $5.38 a share in November last year. That bid was not recommended by the board.

Dye & Durham then offered $2.9bn, or $5.50 a share, for the company in December, but it recently revised its offer lower – to $4.30 a share, based on concerns about gaining clearance from the Australian Competition & Consumer Commission and market volatility.

That offer was rejected, as was a following offer from Dye & Durham at $4.57 a share.

Dye & Durham and Link are understood to have been in negotiations for the past week for a higher offer.

Its move to wind back the price came after the Australian Competition & Consumer Commission expressed concerns about concentration in the conveyancing market, given that Link has a stake in electronic property settlements business PEXA.

Dye & Durham last year purchased property settlements and workflow solutions business GlobalX for $C166m after it entered the Australian market with the $91m acquisition of property and business information provider SAI Global Property, and may need to sell both for a deal to get across the line.