The Link Administration Holdings Ltd (ASX: LNK) share price is going nuts after receiving a takeover offer.
Link helps people manage their assets, including shares, pension, superannuation, investments, property and other financial assets. It partners with thousands of financial market participants to deliver “services, solutions and technology platforms that enhance the user experience and make scaled administration simpler.”
Takeover offer
Link has entered into a scheme implementation deed (takeover) with Mitsubishi UFJ Financial Group (MUFG), a major Japanese business.
If this takeover is approved by shareholders, each investor will get $2.10 cash per Link share, plus a dividend of $0.16 cash per Link share, expected to be franked at roughly 25%.
This values the company at $1.2 billion and an enterprise value of $2.1 billion (which includes the FY23 net debt of $921.2 million).
This offer represents a premium of 32.9% to the closing Link share price on 15 December 2023 and a 52.8% premium to the 1-month average price. It also represents a 12.4x FY23 enterprise value to operating EBIT (EBIT explained) ratio.
Will the takeover go ahead?
Link’s board has unanimously recommended that shareholders vote in favour of the scheme in the absence of a superior proposal and subject to an independent expert concluding (and continuing to conclude) that the takeover offer is in the best interests of Link. Each Link director intends to vote their shares in favour of the deal.
The offer is subject to various conditions, including various regulatory approvals, approval of Link shareholders and so on.
Leadership comments
The Link Group Chair Vivek Bhatia said:
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 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.
Final thoughts on Link shares
It seems like this is going to be enough to get across the line, so it’ll be interesting to see if there are any other takeover offers. Shareholders that have held for a year or longer may be disappointed by this considering it was trading at $3.30 in December last year.