Double whammy: Link share price sinks 9% amid ACCC probe, litigation news

A couple sits on a sofa, each clutching their heads in horror and disbelief, while looking at a laptop screen showing the Nickel Industries share price has dropped by 36% since early MarchA couple sits on a sofa, each clutching their heads in horror and disbelief, while looking at a laptop screen showing the Nickel Industries share price has dropped by 36% since early March

The Link Administration Holdings Ltd (ASX: LNK) share price is sinking in early trading today.

Investors are selling amid news of the ACCC’s “preliminary competition concerns” over Dye & Durham’s (D&D) proposed acquisition of the administration services company.

Meanwhile, shortly before that announcement this morning, the company issued a release noting a potential litigation in an English Court.

At the time of writing, the Link share price is trading at $3.39, down 9.36% on the previous close.

In wider market moves, the S&P/ASX All Technology Index (ASX: XTX) is lifting 2.07%, while the S&P/ASX 200 Financials Index (ASX: XFJ) is up 0.78%.

Here’s how the Link share price stacks up against the two indices in recent months.

TradingView Chart

Link share price sinks amid ACCC probe

The Link share price is falling after the ACCC outlined “significant preliminary competition concerns” with Dye & Durham’s proposed acquisition of the company.

These concerns relate to the conveyancing sector. The ACCC alleges:

The proposed acquisition would align PEXA, a near monopoly provider of Electronic Lodgment Network services, with D&D, a significant supplier of software to lawyers and conveyancers, significantly increasing vertical integration in this industry.

ACCC Deputy Chair Mick Keogh said the acquisition was “relevant to everybody”.

“Given PEXA’s position as the only fully operational Electronic Lodgment Network, the ACCC will closely scrutinise any transaction that would result in vertical integration between PEXA and other industry participants,” he said.

We have significant preliminary concerns that this transaction would enable D&D and PEXA to engage in mutual preferential dealing that would hinder existing competition or raise barriers to entry in one or more markets in the conveyancing workflow.

The Link board responded with a release immediately, noting the probe is a “preliminary view….and is not a final decision”.

“The Link Group Board continues to unanimously recommend that Link Group shareholders vote in favour of the proposed acquisition,” it said.

“Accordingly, Link Group will continue to work closely with D&D to progress the competition approval process and all other regulatory approvals required for implementation.”

Litigation proceedings

In other news also possibly affecting the Link share price, the company this morning said it had been notified by solicitors that proceedings had been filed within the English High Court.

“[Link] has been notified by Harcus Parker and Leigh Day that an application for a Group Litigation Order has been filed in the English High Court,” it said.

“It is expected that the application papers will be served on [Link] shortly.”

Link notes that the claim relates to its role as “authorised corporate director” of the LF Equity Income Fund, formerly the LF Woodford Equity Income Fund.

Link started winding up the Woodford fund in 2020, returning cash to investors.

The Financial Conduct Authority (FCA) website shows a long list of history and an ongoing investigation with the fund.

Despite the pressure, the company isn’t backing down.

“[Link] will vigorously defend itself against the proceedings,” it said.

Meanwhile, the Link share price has slipped 32% into the red over the past year, and almost 40% this year to date.

The post Double whammy: Link share price sinks 9% amid ACCC probe, litigation news appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Link Administration Holdings Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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