Takeover target Link Group’s newly appointed boss Vivek Bhatia says the company was closely assessing the competing offers on the table, while working to lift its performance in the new year.
Link was approached in October by a private equity consortium, led by Pacific Equity Partners (PEP) and The Carlyle Group, with the bid valuing the company at around $2.9 billion. Link this week received another offer from US-based SS&C Technologies Holdings that values the firm at around $3.6 billion.
Mr Bhatia, speaking at the superannuation fund administrator’s investor day on Wednesday, did not provide further details on the status of potential deals. However, he acknowledged both offers were being actively considered by the board.
“The Link group board continues to consider all options, including obtaining advice from financial and legal advisors and will provide an update in due course,” he said. “Suffice to say, we believe the sound fundamentals of the business speak for ourselves.”
The bids lobbed by the suitors have split investors, with heavyweights such as Perpetual throwing support behind the early offers and Morningstar’s senior equity analyst Gareth James saying both had materially under-valued the company. With Link’s stocks soaring over 13 per cent on news of the SS&C offer, Mr James said the US firm’s entry could spark a bidding war for Link.
The PEP-Carlyle offer includes an option to carve out Link’s valuable property settlements platform, PEXA. Link chief financial officer Andrew MacLachlan told investors on Wednesday that PEXA had seen record-breaking cash flow, with revenue quadrupling in two years and growing by $82 million in the first five months of fiscal 2021.
“This is a terrific performance,” he said. “And, I remind you, in an environment where Victoria was in a lockdown for the bulk of this period.”
Mr Bhatia, who joined Link Group in November, said he had spent his first few weeks as chief executive getting to know the company and had identified “a few things we need to do better”, including more consistent service delivery and further cost cuttings.
Link reported a sea of red at its full year results after regulatory changes, including the Australian Tax Office’s policy to close inactive accounts, put a strain the company’s profits.
Mr Bhatia said there was “no denying” Link had “faced headwinds”. However, he added that these issues were abating as the company looks to lift its performance.
“Our focus has to be on anticipating client needs better, working with them to see around the bend and creating better customer value,” he said. “We need to make tough decisions on what is truly important to us.”
Link’s share price fell by 1.60 per cent to $5.55 in afternoon trade.
Source: Thanks smh.com