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Why the Link (ASX:LNK) share price is dropping 11% lower today

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The Link Administration Holdings Ltd (ASX: LNK) share price is under pressure on Monday after providing an update on its takeover approach.

At the time of writing, the administration services company’s shares are down 11% to $4.91.

What did Link announce?

This morning Link provided the market with an update on the conditional, non-binding indicative proposal from SS&C Technology Holdings that it received on 7 December.

The NASDAQ listed global provider of investment and financial software enabled services and software had made an offer of $5.65 per share to acquire 100% of Link.

This was subject to SS&C Technology receiving confirmatory due diligence, debt financing on acceptable terms, the negotiation and execution of transaction documentation, and necessary corporate and regulatory approvals.

While the Link board did not believe the proposal represented compelling value for shareholders, it considered it appropriate to provide SS&C Technology with due diligence information on a non-exclusive basis. This was so that it could develop a proposal that may be capable of being recommended to shareholders.

However, this morning the company revealed that it has received a letter from SS&C Technology stating that it has withdrawn its proposal. No reason was given for the withdrawal.

Management advised that shareholders do not need to take any action in relation to this or any proposal. Furthermore, if there are material developments in the future, it intends to inform shareholders as required under its continuous disclosure obligations.

What now?

The Link board has advised that it will continue to consider all alternatives to maximise value for shareholders.

As it has previously announced, this includes a potential separation by way of demerger of its interest in the PEXA business. Link will also explore a trade sale of its interest from 18 January 2021.

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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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