The Link Administration Holdings Ltd (ASX: LNK) share price is rising after the business received a takeover offer.
Link receives another takeover offer
Link has received another takeover offer, though this one is a lot smaller.
The financial business has received a conditional, non-binding indicative proposal from a syndicate led by Pepper European Servicing Limited. It was noted that this is not the same business as Pepper Money Ltd (ASX: PPM).
This offer is to buy Link’s banking and credit management business for up to €55 million, or $86.5 million in Aussie dollars.
The proposal is for the syndicate to buy the non-Irish businesses for €25 million plus a deferred payment of €15 million over three years on reaching certain targets. The other member of the syndicate will buy the Irish business for €15 million.
Some of the conditions includes due diligence and securing debt financing.
Link said the board will consider the proposal, including obtaining advice from its financial, legal and tax advisers.
A bidding war?
This is an interesting development considering Link is already thinking about another offer. The private equity entity The Carlyle Group wants to buy the whole of the Link Group business.
Carlyle’s offer was $3 per Link Group share plus a distribution of Link’s shareholding of PEXA Group Ltd (ASX: PXA) shares. On 4 November 2021, the PEXA part of the offer was valued at $2.38 per Link share on a lookthrough basis.
Based on this lookthrough valuation, the proposal values each Link share at at share price of $5.38. That represented a premium of 24.2% to the last closing Link price.
This offer is also subject to conditions such as due diligence and securing debt financing.
The Link board is also considering this proposal.
Summary thoughts on the Link share price
I’m not sure if either of these offers will go through, it depends how much shareholders want to exit the business.
Carlyle’s offer of $5.38 per share was at a good premium, but it was lower than the share price has been at times over the last 12 months.
If I were a shareholder, I’d be happy that some international investors are seeing compelling value, but I’d hope for bigger bids.
