‘Materially undervalued’: Link rejects $2.8b takeover bid

Admin services giant Link has rejected the $2.8 billion takeover bid mounted by a consortium of private equity firms, claiming it materially undervalues the company.

Private equity firms Pacific Equity Partners and Carlyle Group offered to buy 100 per cent of the company’s shares earlier this month, for a price lower than what PEP initially floated the company for in 2015.

One of Link chief executive John McMurtrie's final decisions is overseeing the private equity takeover bid.
One of Link chief executive John McMurtrie’s final decisions is overseeing the private equity takeover bid. Credit:Edwina Pickles

Investors were split on whether the takeover bid would be good for Link, that provides admin and call centre services for major super funds, with Perpetual backing the deal and Yarra Capital saying a better offer was needed.

Link said it had held a number of discussions with the private equity consortium and shareholders but unanimously decided to reject the proposal.


“As presented, [it] materially undervalues Link group on a control basis and is not in the best interests of shareholders,” Link said.

Sources close to the private equity firms, who were not authorised to speak on behalf of the companies, said there was no substantive engagement over the proposal and the firms would now consider whether “they want to stay engaged or walk.”

Yarra Capital managing director Dion Hershan said the consortium’s approach had three fundamental problems. “It materially undervalued the company, there was a chronic lack of detail around what options they’re proposing for PEXA and a long list of conditionality.”

The consortium had offered to takeover the bulk of the company, but leave the highly profitable property settlements platform PEXA with shareholders. Link said it would continue to engage with the firms over a corporate restructure, that will likely include de-merging and re-listing PEXA.

Mr Hershan said he was “very supportive” of the board’s approach and they had done the “responsible thing” in pursuing alternate options for PEXA.

In a Goldman Sachs presentation delivered on Wednesday, Link reported PEXA had seen a 43 per cent increase in revenue for the year and a five-fold increase in earnings. Mr Hershan said it was an “excellent idea” to spin off and re-list PEXA.

“We have for some time taken the view that business is chronically undervalued within Link,” Mr Hershan said. “As a standalone, it could be one of the most attractive Australian tech companies in the listed market.”

Link saw its workload increase by more than 50 per cent this year as it processed around half of the $34.3 billion in superannuation withdrawals under the government’s emergency access scheme.

The company reported a sea of red at its full-year results in August, with falls in revenue, operating profits and cash flow tied to growing regulatory headwinds.

In a market update on Friday morning, Link said it expects to see a fast recovery over the coming years as its transformation plan progresses and markets recover.

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Source: Thanks smh.com