The Link Administration Holdings Ltd (ASX: LNK) share price is on the move today after the business provided an update on the proposal for its Banking and Credit Management (BCM) division.
Currently, the Link share price is up 0.83% to $4.84.
LNK share price
Take your shoes off at the front door
After consulting its advisors and several shareholders, Link has decided to grant due diligence on an exclusive basis to Pepper European Servicing Limited (PES) until December 17.
Due diligence will only relate to the BCM division and is subject to standard customary fiduciary-out exceptions.
Fiduciary out allows a company’s board to walk away from a transaction if it deems it’s not in the best interest of shareholders.
The exclusive due diligence period does not restrict Link from considering other proposals.
There is no certainty that a deal with PES will go forward, given its offer remains non-binding and subject to regulatory approvals.
PES would also need to secure debt financing for the deal.
Shareholders do not need to take any action.
Link moves fast to grant access
Just last week a syndicate led by PES made a conditional, non-binding offer to acquire BCM for up to €55.0 million (AU$86.5 million).
PES would purchase the non-Irish operations of BCM for €25 million. An additional €15 million is payable subject to achieving certain targets over the next three years.
The other member of the syndicate would purchase the Irish operations for €15 million.
Battle heats up
Link is also under the eye of private equity outfit Carlyle Group, which made a proposal this month.
The Carlyle offer is for the entire Link business. It will hive off Link’s 42% shareholding digital property settlement platform PEXA Group Ltd (ASX: PXA) and pass on the proceeds to shareholders estimated to be about $2.38 per share.
Additionally, Carlyle will stump up $3.00 per share in cash bringing the total offer for Link to $5.38.
The Link share price is still 10% below that premium, implying the market remains sceptical if the bid will go through.
Nonetheless, having two bidders eyeing off the company is a positive for the Link board.
It will be able to leverage its offer to hopefully seek a better outcome for shareholders.
Not our first rodeo
Link shareholders will point to the past failed takeover offers from a combined offer last year from Carlyle and Pacific Equity Partners.
Additionally, a separate offer from SS&C Technology Holdings was granted due diligence but the bidder walked away.
It’s difficult to know what the outcome will be this time. But I’m optimistic that bidders wouldn’t be coming back for a second bite of the cherry unless they were serious.
