Link touts PEXA stake after price scares bidder

Link chairman Michael Carapiet has led the group through engagement with interested bidders.​

The collapse of a $3bn-plus bid for Link Group looks to have largely come down to price rather than any glaring red flags stumbled upon by Nasdaq-listed SS&C Technology.

When they were ushered in to look deeper into Link’s books and business — including Zoom meetings with key management personnel — SS&C just weren’t convinced the company was worth any more than the indicative bid price of $5.65.

On the SS&C side, chair and CEO Bill Stone and senior vice president and general manager of DST Systems Mike Sleightholme were heavily involved in the Link deliberations.

They were after a friendly deal, and thought by well surpassing a joint private equity bid of $5.40 per Link share, they stood a good chance of meaningful engagement.

The management meetings with the bidder delved into post-Covid-19 recovery assumptions, and other earnings drivers at the share registry, super administration and financial services company. But it wasn’t enough.

SS&C is highly acquisitive and knows the M&A game well, so the withdrawal of the Link bid means they see better opportunities elsewhere.

For the Michael Carapiet-chaired Link board — which had earlier said the SS&C offer did “not represent compelling value” — there are two likely scenarios that can play out. Link is fortunate it can also appease frustrated shareholders with either a trade sale or demerger of its 44 per cent stake in online property settlement firm PEXA.

Informal soundings by the Link camp of interest by private equity and Macquarie Group’s infrastructure and real assets funds business in the PEXA holding has already begun.

There are two pertinent examples the Link board should consider as it plots its next move, and any engagement with private equity suitors Pacific Equity Partners and The Carlyle Group on their sweetened $5.40 offer.

First Link should consider the board of Treasury Wine Estates’ batting off bids in 2014.

While that board was under pressure, and rebuffed two private equity bids, in time it was vindicated for knocking back the respective offers pegged at $5.20 per share. TWE’s stock is now at $9.15, with China trade ructions factored into the price.

But it’s been a different situation for telco Vocus, which has been the subject of at least a trio of takeover offers since 2017. Its shares continue to trade well below where several of those indicative bids came in.

The withdrawal of SS&C’s Link offer has the target’s shares 15.7 per cent lower than where they closed on December 31. The stock finished Thursday at $4.68. Investors on Monday were frazzled about bidding tension being removed from the Link situation and what deterred SS&C, and were also questioning the prospects of the joint private equity bid succeeding.

SS&C isn’t a stranger to this market. In 2019, it entered a bidding contest for financial technology group GBST, which was acquired by global group FNZ.

SS&C has, however, completed a spate of deals in the past three years, including in 2020 buying consulting firm Innovest and machine learning data group Captricity. Two years earlier, SS&C acquired larger targets including virtual dataroom firm Intralinks for $US1.5bn, advisory technology group DST Systems for $US5.4bn and investment software firm Eze Software for $US1.45bn.

With the trade sale process for Link’s PEXA stake revving up in coming weeks, the focus remains squarely on the Link board and their next move.

QBE vacancies

QBE Insurance is making headway on its executive search to permanently fill the head of Australia role, being kept warm in the interim by former Youi local boss Frank Costigan, who joined QBE in 2018.

This column understands the insurer was conducting interviews right up until Christmas and is now down to the final two candidates. The role is an important one as the board is viewing the person chosen as a strong succession candidate to replace whoever takes the group chief executive job, which is also the subject of a global search.

QBE parted ways with group CEO Pat Regan in September last year due to inappropriate conduct following a complaint from a US-based female employee.

Russell Reynolds Associates is conducting the QBE CEO search, while Johnson Partners is helping to fill the role of Australia boss vacated by Vivek Bhatia, who is now Link Group CEO.

QBE tapped international boss Richard Pryce as acting group CEO.

Moving on

Former Sargon Capital founder Phillip Kingston has several new ventures on the go, including informing his contacts two weeks ago that he is now a partner at Harrington Kingston Hass.

Financial services outfit Sargon, whose board included former Labor senator Stephen Conroy, collapsed a year ago when administrators McGrathNicol were appointed.

It doesn’t, however, look to have dented Kingston’s entrepreneurial spirit.

He was keen to tell his LinkedIn connections about the new venture, which is described as an investigation, negotiation and counter-intelligence company.

“If you need witnesses found, anything looked into or real-time information support for complex litigation anywhere in the world” the new firm can apparently help.

It may seems like an odd move for Kingston but he surely has a diverse range of projects at any one time, including television financing and development group Dragonfire, where he is a partner.

Also listed on his profile is that he founded defence and space industry firm Galactic Bioware. That company’s website notes it is “coming soon”.