Link share price dips despite Foreign Investment takeover nod

The Link Administration Holdings Ltd (ASX: LNK) share price is struggling to find its feet today. 

At the time of writing, Link shares are down 1.42% to $3.48 apiece, despite the company becoming one step closer to being gobbled up by Dye & Durham (TSX: DND).

As a refresher, at the end of last year, Dye & Durham launched a $2.9 billion takeover bid for Link, offering shareholders base consideration of $5.50 per share.

Since then, there’s been plenty of back and forth between regulators and the companies themselves. Ultimately, Link shareholders have accepted a revised offer of $4.81 per share.

Dye & Durham provides mission-critical software for legal, financial, and business professionals. It’s listed on the Canadian stock exchange with a current market capitalisation of just over $1 billion.

Interestingly, Dye & Durham’s market cap is dwarfed by the potential acquisition price for Link. 

As a result, Dye & Durham lined up a $3.5 billion loan from Goldman Sachs, JP Morgan, and Ares Capital. This spooked investors when the details became public in May, sending the Link share price reeling.

Is the Link takeover going ahead?

This morning, Link disclosed that the Foreign Investment Review Board (FIRB) had “no objections” to the proposed takeover. 

This comes after the Australian Competition and Consumer Commission (ACCC) gave the deal the green light last week. 

The ACCC was one of the deal’s biggest hurdles. The competition watchdog raised concerns over Link’s 42.8% stake in PEXA Group Ltd (ASX: PXA), noting:

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.

To satisfy the ACCC, Dye & Durham will divest its existing Australian business.

However, it had to deal with another spanner in the works earlier this week. In order to gain its seal of approval, the United Kingdom Financial Conduct Authority (FCA) is asking Dye & Durham to put down $519 million towards redress payments relating to the now-collapsed Woodford Equity Income Fund.

The market is yet to receive word about whether or not Dye & Durham will accept this requirement. If it doesn’t, the deal could collapse.

According to reporting in the Australian Financial Review, Link’s CEO Vivek Bhatia has flown to London in an ’emergency dash’ to try to salvage the deal. Bhatia is reportedly in high-level talks with lawyers and the FCA.

In the meantime, Link has pushed back the second court hearing for the proposed transaction to 23 September.  

The wide convergence between the current Link share price and the takeover offer price signals the market’s confidence in the deal going through. 

There’s currently 38% upside on offer if the deal goes ahead at $4.81 per share.

The post Link share price dips despite Foreign Investment takeover nod appeared first on The Motley Fool Australia.

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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Cathryn Goh 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 Goldman Sachs, Link Administration Holdings Ltd, and PEXA Group Limited. 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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