The Link Administration Holdings Ltd (ASX: LNK) share price has come under pressure on Wednesday.
In afternoon trade, the administration services company’s shares are down 6% to $4.96.
Why is the Link share price sinking?
Investors have been selling Link’s shares following the release of an update on its takeover approach by a consortium comprising Pacific Equity Partners, Carlyle Group and their affiliates.
Last year the consortium made a non-binding indicative proposal to acquire the company for a cash price of $5.40 per share.
SS&C Technology then came to the table in December, outbidding the consortium with a conditional, non-binding indicative proposal of $5.65 cash per share.
However, after providing SS&C Technology with due diligence, it soon withdrew its offer.
What’s the latest?
This morning the Pacific Equity Partners and Carlyle Group consortium informed Link that it would also be withdrawing its offer following a period of due diligence.
While no reason was given for the withdrawal, Link was quick to note that this wasn’t to do with its performance in FY 2021.
It advised that its FY 2021 financial performance and achievement of outcomes from the Global Transformation Program remain in line with expectations.
What now?
The company is now focusing on unlocking value through either the IPO or sale of its PEXA business.
The latter of the two options appears to be the most likely outcome, with management revealing that it has received non-binding indications of interest.
Furthermore, it notes that this interest better reflects the underlying value of PEXA and is significantly greater than the consortium proposal’s implied enterprise value of approximately $1.95 billion for PEXA.
Management advised that binding offers are expected to be made for PEXA in June. It intends to keep the market informed with developments as and when they happen.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Link Administration Holdings Ltd. The Motley Fool Australia has recommended Link Administration Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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