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Link (ASX:LNK) share price on watch on Thursday following takeover update

M&A Letters

The Link Administration Holdings Ltd (ASX: LNK) share price will be one to watch tomorrow after the release of an after-market update on its takeover approach.

What did Link announce?

Late last week the administrations services provider rejected a non-binding takeover proposal from a consortium comprising Pacific Equity Partners, Carlyle Group, and their affiliates.

After careful consideration and discussions with advisors and shareholders, the Link board decided that the offer of $5.20 cash per share materially undervalued the company and was not in the best interests of shareholders.

It didn’t take long for the consortium to come back with a better offer. On Monday it tabled a non-binding indicative proposal of $5.40 cash per share, up 20 cents from its previous offer. It also gave Link until 5pm today to respond to the approach.

After the market close, Link revealed that its board has carefully considered the revised proposal.

It advised that it does not believe the proposal represents compelling value for shareholders. It feels further work is required to determine the viability and attractiveness of the separation of the PEXA and Link (ex PEXA) assets.

Nevertheless, the board considers that it is appropriate to provide the consortium with due diligence information on a non-exclusive basis. This is so that it can develop a proposal that may be capable of being recommended to shareholders.

The due diligence information will be provided subject to entry into an appropriate confidentiality agreement containing suitable protections for Link, including a standstill clause.

It has warned shareholders that there can be no certainty that such a proposal will eventuate and that they do not need to take any action at this stage.

In addition to this, the board is continuing to examine structural alternatives, including a potential separation and demerger of PEXA.

In the meantime, if there are material developments in the future, Link intends to inform shareholders as required under its continuous disclosure obligations.

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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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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