The Link Administration Holdings Ltd (ASX: LNK) share price has been an exceptionally strong performer on Monday.
In morning trade the administration services provider’s shares are up a sizeable 26.5% to $5.05.
Why is the Link share price surging higher?
Investors have been fighting to get hold of the company’s shares on Monday after it revealed that it has received a takeover approach.
According to the release, Link has received a conditional, non-binding indicative proposal from a consortium comprising Pacific Equity Partners, Carlyle Group, and their affiliates.
The consortium has offered to acquire 100% of the shares in Link by way of a scheme of arrangement with an indicative cash price of $5.20 per share. Management advised that the proposal also includes a reference to potential scrip alternatives.
The consortium’s offer implies a 30% premium to the company’s last close price and assumes no further dividends, distributions, or reductions in capital being paid.
The consortium’s proposal is subject to a number of conditions. These include due diligence, negotiation and execution of transaction documentation, securing debt financing, final investment committee approval, and certain regulatory and other approvals. The latter includes the Foreign Investment Review Board.
Major shareholder Perpetual Limited (ASX: PPT), which holds a 9.65% stake, is happy with the proposal. It has stated that it intends to vote its shares in favour of the proposal at a price of no less than $5.20, should one proceed.
Though, it notes that this statement is subject to the absence of a superior proposal and Perpetual continuing to hold its shares on the date of any meeting.
The Link board hasn’t yet made a decision on whether to support the proposal. It is considering the offer and is obtaining advice from its financial and legal advisers.
As a result, it has advised shareholders that they do not need to take any action in relation to the proposal at this point. It also warned that there is no certainty that the discussions with the consortium will result in any transaction.
In the meantime, Link will inform shareholders of any meaningful developments when they happen, as required under its continuous disclosure obligations.