Link investor

Link shares plummet as Dye & Durham doubts grow

Earlier in the month, Link rejected a revised offer of $4.30 six months after an initial sale was thrown into doubt amid a market sell-off and emerging concerns from the competition watchdog.

Shares of Link had fallen as low as $3.25 in mid-June amid doubts that Dye & Durham would complete the sale originally completed in late December 2021 at $5.50 per share.

Dye & Durham’s share price has more than halved in the past six months amid a rout in tech stocks. The offer on Link was to be funded by a $3.5 billion loan from Goldman Sachs, JPMorgan and Ares Capital. But a falling market capitalization coupled with the large pending debt burden has raised doubts about the possibility of a deal.

Then, on June 16, 16, the deal hit its biggest hurdle after the Australian Consumer and Competition Commission said it had “significant preliminary competition concerns” over the deal.

At the center of his concerns is Link’s 42.8% stake in electronic settlements platform PEXA, given Dye & The Durham property of GlobalX and the real estate unit of SAI Global.

This combination of events in turn prompted Dye & Durham to re-cut its offer at a discounted price of $4.30 before raising it to $4.57.

The offer is subject to regulatory approvals in nearly a dozen jurisdictions, including Australia, and a September 30 deadline.

Worries over a deal overshadowed an improving earnings outlook for Link.

On Tuesday, analysts at Morgan Stanley raised its share price target from $4.40 to $4.90. This increase in the price target, he said, was mainly due to an increase in the market value of PEXA, which has seen strong growth recently, in addition to a rise in valuation due to profits. higher than initially expected.

The brokerage said that after several years of negative earnings growth, Link’s preliminary results, released on Monday, showed “operating earnings are starting to stabilize.”

Expected earnings growth of around 10% “suggests a stronger recovery than we or the consensus had previously expected,” the brokerage said.

“We expect medium-term structural growth for Link in the area of ​​pensions and fund administration, although we believe Link needs a multi-year investment program to provide these options,” said Morgan Stanley analysts.