Dye & Durham’s (D&D) proposed takeover of Link Group has now officially been called off after the court declined to approve the scheme and dismissed the proceedings.
In a statement to the ASX on Monday, Link confirmed that the scheme implementation deed between the two firms had been terminated following the court’s dismissal last Friday.
Three precedent conditions of the takeover, including relating to the Woodford matters as well as approval from the UK’s Financial Conduct Authority (FCA), were yet to have been met.
“Under the scheme implementation deed between Link Group and Dye & Durham, the time for satisfaction of the outstanding conditions precedent has expired. There is no expectation that the outstanding conditions precedent for the transaction will be satisfied,” Link said.
The firm’s UK subsidiary, Link Fund Solutions, is facing a penalty of £50 million ($83 million) for its role in the collapse of the LF Woodford Equity Income Fund in 2019.
This penalty is in addition to the redress payment of up to £306 million ($506 million) that Link Fund Solutions may need to pay, which the FCA had expected D&D to commit to covering in order to receive the regulator’s approval.
D&D acknowledged the end of the acquisition discussions in a statement on Friday.
“While we are disappointed with this outcome given the significant time and resources invested in managing this process over the last 10 months, we have a robust pipeline of M&A opportunities before us and a proven and extensive track record of allocating capital to acquisitions that deliver outsized investor returns,” said D&D CEO, Matthew Proud.
“We plan to continue to focus on deploying capital on deals with attractive economics, steady cash flow and significant growth potential and optimising them to drive additional shareholder value.”
Link has announced it will pay a fully franked special dividend of $0.08 per share on 14 October with a record date of 30 September.
This is in addition to the half-year dividend of $0.03 per share paid by Link in April and follows a dividend of $0.10 per share in FY21, partially franked at 60 per cent.
The firm has reaffirmed its guidance for FY23, with projections for a “low single digit percentage” increase in revenue, an 8 to 10 per cent increase in operating EBITDA and a 10 to 12 per cent increase in operating EBIT.
As previously noted, Link is also evaluating alternatives for its business, including an in-specie distribution of a minimum of 80 per cent of its shareholding in PEXA in order to maximise value for shareholders.
