Dye & Durham’s $3.5bn buyout proposal of Link Administration Holdings is under a cloud as the suitor’s share price languishes and suggestions surface in the market that the competition watchdog is opposed to the transaction.
Sources believe that a meeting over the deal with the regulators last week was understood not to have gone well, with the Australian Competition & Consumer Commission said to be concerned about a concentration of ownership with regards to conveyancing services should the acquisition proceed.
The ACCC announced on Tuesday that a decision on whether it would approve the transaction due on May 26 had been delayed until further notice while it awaited further information.
Shares in Link paused trading on Wednesday after the stock fell more than 12 per cent, with investors questioning the future direction of the company should a deal not proceed.
Link owns a 43 per cent stake in Property Exchange Australia, which dominates the market when it comes to electronic real estate settlements.
Dye & Durham last year purchased property settlements and workflow solutions business GlobalX for $C166m ($183m) after it entered the Australian market with the $91m acquisition of SAI Global Property.
The competition watchdog had earlier indicated to Pexa that it would face opposition from a GlobalX acquisition.
Dye & Durham had offered in December $5.50 per share for Link, which on Wednesday last traded down 15 per cent to $4.22, with its market value at $2.5bn.
Dye & Durham’s share price, meanwhile, has since crashed, with falls linked to negative sentiment around its acquisition plans that have prompted the group to substantially raise prices.
It purchased from OMERs’ Teranet DoProcess, software service provider for real estate lawyers and has more than doubled the prices of the product.
To fund the Link deal, Ares had agreed to acquire from Dye & Durham up to C$841m in preference shares and up to $C109m of common shares at C$53 per share, which represented a 32 per cent premium to the December 20 closing price.
It was also securing a $3.5bn loan through Goldman Sachs, JPMorgan and Ares as well as a $150m revolving facility.
However, Dye & Durham’s share price in Canada on Wednesday was at C$14.56, with its market value at C$1bn, prompting fears about whether it can still obtain the finance needed for the transaction.
Shares in Dye & Durham slid 8.7 per cent in the previous trading session ahead of its third quarter earnings update on May 12.
On Wednesday, Link told the market it was not aware of any information about the Dye & Durham acquisition that was not in its scheme documents, approved by the Supreme Court of NSW on May 10.
It added that it was not aware of any reason for the decline in its share price and the elevated trading volumes.
Dye & Durham provides Australian legal, property and financial professionals with regulatory information, workflow technology, property settlement services.
Link is an Australia-based company engaged in providing services to the superannuation administration industry.
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