Link share price jumps 26% on $1.2b takeover offer

Link shares could soon be leaving the ASX boards.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Link Administration Holdings Ltd (ASX: LNK) share price has burst out of the gates on Monday morning.

At the time of writing, the administration services company's shares are up 26% to $2.14.

Two CEOs shaking hands on a deal.

Image source: Getty Images

Why is the Link share price jumping?

Investors have been buying the company's shares today after it received and accepted a takeover offer.

According to the release, Link has entered into a scheme implementation deed with Mitsubishi UFJ Trust & Banking Corporation, under which the latter will acquire 100% of the shares in Link Group by way of a scheme of arrangement.

Mitsubishi UFJ has tabled a $2.26 cash per share offer, which comprises $2.10 cash per share and a 25% franked dividend of $0.16 per share.

This represents a 32.9% premium to where the Link Group share price ended last week. It values its equity at $1.2 billion and implies an enterprise value of $2.1 billion.

Why was the offer accepted?

Link Group's Chair, Michael Carapiet, highlights the offer's significant premium. He said:

We are pleased that The Trust Bank has recognised value in Link Group's market leading and global businesses of Retirement & Superannuation Solutions (RSS) and Corporate Markets (CM).

While the Link Group Board has and remains confident about the company's future, we acknowledge that the Scheme provides shareholders with the opportunity to receive cash value at a significant premium.

The Board's unanimous recommendation [to vote in favour of the scheme] was based on a thorough evaluation of various factors, including Link Group's intrinsic value under different scenarios and the potential medium-term share price without the Scheme.

The Board believes that the proposed transaction will benefit both shareholders and stakeholders, and is in line with the Board's priority to deliver shareholder value.

The Link's board's unanimous recommendation is in the absence of a superior proposal and subject to an independent expert concluding that the scheme is in the best interests of shareholders. The scheme remains subject to various approvals.

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. 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.

More on Financial Shares

two people sitting at a desk look on in dismay as a colleague holds a chart with diminishing green bars topped with a jagged red line representing a stock market crash.
Financial Shares

Down 55%! Can this ASX financial stock stage a major comeback?

Some brokers see upside well above 180%!

Read more »

A young couple sits at their kitchen table looking at documents with a laptop open in front of them.
Financial Shares

AMP jumps on $150 million buyback and CEO handover. Is this beaten-down ASX stock turning a corner?

Investors are cheering AMP’s buyback plan as Blair Vernon officially takes charge.

Read more »

A woman smiles at the outlook she sees through binoculars.
Financial Shares

How much could the Macquarie share price rise in the next year?

This financial giant could deliver big returns.

Read more »

A woman presenting company news to investors looks back at the camera and smiles.
Financial Shares

AMP shares charge higher on Monday despite market selloff: What's going on?

What has this financial services company announced? Let's find out.

Read more »

CEO of a company talking.
Financial Shares

Suncorp shares slip as CEO steps aside

Suncorp shares slip after its CEO takes short-term medical leave.

Read more »

A young man working from home sits at his home office desk holding a cup of tea and looking out the window.
Financial Shares

Why is the Magellan share price down 6% today?

The investment manager issued an update regarding the proposed Barrenjoey merger today.

Read more »

Worried woman calculating domestic bills.
Mergers & Acquisitions

Challenger jumps 4%, Pepper Money sinks as takeover collapses

Bid rejected, premium gone. Here's why one stock fell while the other rallied

Read more »

A woman in a red dress holding up a red graph.
Financial Shares

Which ASX financial stock could deliver 30% upside?

A recent share price dip could signal an opportunity.

Read more »