Link share price drops on takeover rejection

Link has rejected a takeover offer from Dye & Durham…

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Key points

  • Link shares are dropping on Monday morning
  • This follows news that the company has rejected Dye & Durham's takeover approach
  • Lat week Dye & Durham reduced its offer from $5.50 per share to $4.30 per share

The Link Administration Holdings Ltd (ASX: LNK) share price is trading lower on Monday morning.

In early trade, the administration services company’s shares are down 2% to $3.72.

Why is the Link share price sinking?

Investors have been selling down the Link share price on Monday following the release of a takeover update.

This relates the receipt of an amended proposal from Dye & Durham last week which saw the suitor reduce its takeover offer from $5.50 per share to $4.30 per share.

Dye & Durham reduced its offer to reflect a proposed undertaking to the ACCC in order to obtain approval, the current state of the financial markets, and the values of the shares of both Link and PEXA Group Ltd (ASX: PXA).

What’s the latest?

As you might have guessed from the Link share price weakness this morning, today’s update has not been a positive one.

According to the release, the Link board has carefully considered Dye & Durham’s proposal. This includes considering feedback from stakeholders, changes in share market valuations, and alternatives available to Link if the transaction does not proceed.

After considering all these factors, the Link board does not believe it is able to recommend a $4.30 per share transaction.

Though, it is continuing to engage with Dye & Durham. And if an undertaking is proposed by Dye & Durham to the ACCC which Link considers will satisfy the the competition regulator’s concerns, it would be willing to consider a higher bid.

Nevertheless, in light of these developments, the company has cancelled the scheme meeting that was scheduled for next week.

What are the alternatives?

The release notes that if the scheme does not proceed, Link intends to evaluate alternatives for the business.

One potential alternative is an in specie distribution of a minimum of 80% of Link’s shareholding in PEXA.

Motley Fool contributor James Mickleboro 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 Link Administration Holdings Ltd. 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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