Aussie takeover saga goes from epic to farce

PEXA

05/10/2022 05:46

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are their own.)
       MELBOURNE, Oct 5 (Reuters Breakingviews) - Takeover
sagas can become epic battles. The two-year-long attempts to buy
Australian share registry firm Link Administration  LNK.AX ,
though, has turned into a farce. Canada’s Dye & Durham  DND.TO 
appeared to have won the prize in December for A$2.8 billion
($1.8 billion), fending off Carlyle  CG.O  and others. The two
even managed to agree to a lower price as markets tanked, but a
potential 350 million pound fine for one of Link’s UK
subsidiaries appeared to kill off the deal. Now Dye & Durham is
back with three different offers in rapid succession for just
two of Link’s four main businesses.
    At almost A$1.3 billion, the latest bid in theory looks
promising. Link’s remaining businesses are worth almost A$700
million, using its current EV/EBITDA multiple and stripping out
the debt. Add in its 43% stake in PEXA  PXA.AX  and it would
seem like shareholders could crystallise A$3 billion in value,
more than D&D put on the table last year. 
    But D&D’s offer explicitly excludes taking on any of Link’s
A$1.1 billion of debt, meaning the rump company’s leverage would
shoot up to almost 6 times trailing EBITDA. And it could still
be on the hook for any UK fines. It’s just not worth the
risk.(By Antony Currie)
    Follow @Breakingviews on Twitter
    Capital Calls - More concise insights on global finance:
  Berkshire successor isn’t following Buffett’s lead
 urn:newsml:reuters.com:*:nL4N3152KP
    M6 sale flop requires Bertelsmann detour  urn:newsml:reuters.com:*:nL4N3151ZV
    Shocker Aussie hike sends global calming signal  urn:newsml:reuters.com:*:nL4N3151QK
    Tesla greases supply-chain fears  urn:newsml:reuters.com:*:nL4N3142LL
    India fintech clampdown helps Prosus out of a hole
 urn:newsml:reuters.com:*:nL8N3142JB 
 (Editing by Robyn Mak and Thomas Shum)
 ((SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS https://bit.ly/BVsubscribe
 |))