Aussie takeover saga goes from epic to farce

A board displaying stock prices is seen at the Australian Securities Exchange in Sydney
A board displaying stock prices is seen at the Australian Securities Exchange (ASX) in Sydney, Australia, February 9, 2018. REUTERS/David Gray Purchase Licensing Rights, opens new tab
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), opens new tab, though, has turned into a farce. Canada’s Dye & Durham (DND.TO), opens new tab appeared to have won the prize in December for A$2.8 billion ($1.8 billion), fending off Carlyle (CG.O), opens new tab 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, opens new tab 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), opens new tab 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)
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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)
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