The private equity consortium seeking to take over admin services giant Link Administration Holdings has offered more money, but is threatening to walk if its demands for access to information are not met within two business days.
The consortium, led by firms Carlyle and Pacific Equity Partners, has upped its offer by 3.8 per cent to $2.9 billion while accusing Link’s advisers of failing to meaningfully engage in negotiations after its initial offer to buy 100 per cent of Link’s shares for $5.20 per share was rejected.
“The engagement with your advisers has not been substantive to date,” a letter signed by Carlyle chief financial officer Karen McMonagle and PEP managing director Cameron Blanks said. “Since we commenced our discussions with you on September 10, 2020, we have had only three 30 minute meetings with your advisers.”
The consortium has now given the ASX-listed Link a deadline of 5pm on Wednesday to consider its revised offer to buy the company for $5.40 per share, or for $3.80 per share if property settlements platform PEXA is excluded.
The initial proposal saw backlash from major shareholders, including Yarra Capital managing director Dion Hershan, who argued it “materially undervalued” the company, which was first floated by PEP in 2015 at $6.37 per share.
The consortium said it had the support of 14.6 per cent of Link’s shareholders, including fund manager Perpetual, who backed the initial takeover bid. Investment firms Solaris, Bennelong Long Short Equity and Fisher Funds have also supported the consortium’s offer, but these firms did not respond to requests for comment.
Mr Hershan has previously urged the company to consider spinning off and relisting PEXA, which he said could become one of Australia’s most successful listed technology companies. In a Goldman Sachs presentation delivered last week, Link reported PEXA had seen a 43 per cent increase in revenue for the year and a fivefold increase in earnings.
Link reported falls in revenue, operating profit and cash flow at its full-year result in August, with the declines tied to market volatility brought on by the COVID-19 pandemic and regulatory headwinds.
Link provides administration services for major superannuation funds, including Rest and Hostplus, and has faced depressed earnings as a result of legislation introduced to regulate the retirement savings industry.
Laws introduced last year forced Link to transfer super accounts containing less than $6000 to the Australian Tax Office this month, meaning fewer customers and funds.
The government’s early release of super scheme also doubled the company’s workload in March, as it scrambled to facilitate more than $20 billion in payments, around 60 per cent of total withdrawals.
The private equity consortium has developed a “turnaround plan” to reduce exposure to these risks, but details have not been released.
However, Link argues the government’s recent measure to “staple” members to funds may have long-term advantages for the company, with many of its clients being industry funds that catch first-time workers in hospitality and retail.
The Carlyle- and Pacific Equity Partners-led consortium has requested a six-week period to run the ruler over the company, including access to management, historical financial records and strategic plans, before it can submit a fully financed binding offer to the board.
Link shares jumped by almost 2 per cent and were trading at $4.98 in mid-afternoon trade.
Source: Thanks smh.com