Shares in Link Group soared by more than 27 per cent on Monday after the superannuation fund administrator announced that it had entered into a scheme implementation deed to be taken over by a subsidiary of Mitsubishi UFJ Financial Group (MUFG).
MUFG subsidiary the Trust Bank has agreed to acquire 100 per cent of shares in Link by way of a scheme of arrangement. If the scheme is approved, Link shareholders stand to receive $2.10 in cash and a 16-cent dividend per share.
In an ASX statement on Monday, Link suggested that the offer represents a “significant premium” of 32.9 per cent on its closing price last Friday and values the firm’s equity at $1.2 billion with an enterprise value of $2.1 billion.
In the absence of a superior proposal, and subject to an independent expert concluding that the offer is in shareholders’ best interest, the Link board has unanimously recommended that shareholders vote in favour of the scheme.
“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,” commented Link Group chair Michael Carapiet.
“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.”
The Trust Bank senior managing executive officer and business head of MUFG Investor Services, Takafumi Ihara, said the firm is excited to welcome Link to the MUFG family.
“We truly believe that the acquisition of Link Group will further enable MUFG to accelerate its global business expansion, with access to the Australian superannuation funds and global corporate clients to service with our broad range of MUFG solutions, and enabling us to strengthen the global reach, develop growth opportunities, and expand the business scale together,” he said.
Link Group chief executive officer and managing director Vivek Bhatia said that joining forces with MUFG and the Trust Bank will be “significantly beneficial” to Link’s clients and its employees.
“Their long-term investment horizon will further evolve our service proposition, bolster our growth strategy, and open up significant opportunities for our businesses,” he said.
“We are excited about the opportunities this transaction presents for our future and look forward to working together with MUFG and the Trust Bank to achieve our shared goals.”
Shareholders will be given the opportunity to vote on the scheme at a meeting which Link indicated is currently expected to be held in May next year.
If the scheme is approved by Link shareholders and other conditions precedent are satisfied or waived, the scheme is then expected to be implemented in June 2024.
Canadian firm Dye & Durham previously pursued a takeover of Link beginning in December 2021 before the two firms ended their discussions a year later.
Commenting on the Trust Bank’s takeover bid, Peter Worn, joint managing director of global technology services business Finura Group, said the MUFG subsidiary’s $1.2 billion all-cash deal is “notably less” than the offer made by Dye & Durham.
“Valued only at 8.5 times earnings, this deal highlights the importance of having a robust business model (actual SaaS revenue) for technology companies that support the burgeoning superannuation industry,” he wrote on LinkedIn.
“A rapidly consolidating superannuation sector makes technology services a game of musical chairs. We expect alternative bids to come in.”
The sale was announced at the same time that Link confirmed it had reached a conditional agreement with the UK Financial Conduct Authority (FCA) to settle an investigation into LFS over its role in the collapse of the Woodford Equity Income Fund.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.