The Link Administration Holdings Ltd (ASX: LNK) share price is surging higher on Friday and is the best performer on the S&P/ASX 200 Index (ASX: XJO) by some distance.
In morning trade, the administration services company's shares are up 12% to $4.87.
Why is the Link share price surging higher?
Investors have been bidding the Link share price higher today after it received a takeover approach from private equity firm, Carlyle Group.
The private equity firm, courtesy of its Carlyle Asia Partners business, has tabled a conditional, non-binding indicative proposal to acquire Link for $5.38 per share. This comprises $3.00 cash per share and a pro rata distribution of Link's shareholding in PEXA Group Limited (ASX: PXA) valued at $2.38 per share.
Link owns a 42.77% stake in digital property settlement platform provider, PEXA.
And while today's offer represents a premium of 24.2% to the Link share price at Thursday's close, it is lower than previous takeover proposals.
For example, this isn't the first time that Carlyle has made a play for Link. The private equity firm was part of a consortium aiming to acquire the company for $5.40 per share last year. It eventually withdrew its offer after SS&C Technology made a higher offer of $5.65 per share.
In addition, it is worth noting that Link has since bought back ~$101.7 million worth of its shares as part of a $150 million buyback program. That buyback has now been suspended following the Carlyle approach.
What's next?
The Link Board advised that it intends to consider the proposal but no due diligence has been granted to Carlyle as of yet.
It also notes that the proposal remains subject to a number of conditions and has warned shareholders not to take action in relation to the proposal.
Judging by how far away from the offer price the Link share price is trading today, it appears as though the market has a few doubts that a deal will be ultimately done.
