$3bn bid for Link Group collapses due to price

The collapse of a $3bn-plus bid for Link Group looks to have largely come down to price rather than any glaring red flags stumbled upon by Nasdaq-listed SS&C Technology.

When they were ushered in to look deeper into Link’s books and business — including Zoom meetings with key management personnel — SS&C just weren’t convinced the company was worth any more than the indicative bid price of $5.65.

On the SS&C side, chair and CEO Bill Stone and senior vice president and general manager of DST Systems Mike Sleightholme were heavily involved in the Link deliberations.

They were after a friendly deal, and thought by well surpassing a joint private equity bid of $5.40 per Link share, they stood a good chance of meaningful engagement.

The management meetings with the bidder delved into post-Covid-19 recovery assumptions, and other earnings drivers at the share registry, super administration and financial services company. But it wasn’t enough.

SS&C is highly acquisitive and knows the M&A game well, so the withdrawal of the Link bid means they see better opportunities elsewhere.

For the Michael Carapiet-chaired Link board — which had earlier said the SS&C offer did “not represent compelling value” — there are two likely scenarios that can play out. Link is fortunate it can also appease frustrated shareholders with either a trade sale or demerger of its 44 per cent stake in online property settlement firm PEXA.

Informal soundings by the Link camp of interest by private equity and Macquarie Group’s infrastructure and real assets funds business in the PEXA holding has already begun.

There are two pertinent examples the Link board should consider as it plots its next move, and any engagement with private equity suitors Pacific Equity Partners and The Carlyle Group on their sweetened $5.40 offer.

First Link should consider the board of Treasury Wine Estates’ batting off bids in 2014.