Link Administration agrees to $1.2b takeover from Japanese giant Mitsubishi UFJ

After being pursued by suitors over the past two years, superannuation fund and share registry administrator Link Administration Holdings (ASX: LNK) looks set to be swallowed by Japan’s Mitsubishi UFJ Financial Group (MUFG) in a deal that values the embattled Australian group at $1.2 billion.

Japan's largest financial group has entered into a scheme of arrangement after agreeing to pay Link shareholders a 32.9 per cent premium on the company’s closing most recent share price of $1.70 last Friday.

The $1.2 billion offer – comprised of $2.10 cash per Link Group share plus a dividend of 16c cash per share – follows a tumultuous year for shareholders who have seen the value of their shares fall as low as $1.065 per share in November.

The MUFG deal implies an enterprise value for Link of $2.5 billion and follows a failed attempt by Dye & Durham to buy out Link Administration earlier this year. The Canadian giant walked away from its conditional $1.27 billion takeover last December despite an extended tilt at Link which started when it topped a bid from Carlyle Asia Partners a year earlier.

Link’s board has unanimously recommended that, in the absence of a better offer, shareholders vote in favour of the scheme proposed by MUFG subsidiary Mitsubishi UFJ Trust & Banking Corporation (The Trust Bank).

The proposal is scheduled to be put to a shareholder vote in May next year with the deal poised for settlement in June.

“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,” says Link chairman 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.”

 Link CEO Vivek Bhatia says the offer ‘validates Link Group's leading global technology-enabled platforms, which serve as core infrastructure in financial markets in multiple jurisdictions around the world’.

“Joining forces with a global leader like MUFG and The Trust Bank will be significantly beneficial to our clients and employees,” he says.

“Their long-term investment horizon will further evolve our service proposition, bolster our growth strategy, and open up significant opportunities for our businesses.”

The Japanese financial services giant sees significant growth opportunities ahead for Link following the proposed buyout.

“The Trust Bank is one of the largest pension and stock administration providers in Japan and we look forward to jointly growing in this space,” says The Trust Bank’s head of MUFG Investor Services, Takafumi Ihara.

“Also, 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.”

The takeover offer comes despite the fate of Link’s troubled UK subsidiary, Link Fund Solutions, remaining up in the air.

Link Fund Solutions, which has been embroiled in the 2019 collapse of the LF Equity Income Fund formerly known as the LF Woodford Equity Income Fund (WEIF), was earlier this year served with a class action by investors in the fund.

However, last Friday Link announced that investors in the fund agreed to a scheme of arrangement. The company says that while the outcome of that vote continues to be finalised, it was confident that any liabilities would remain limited to the UK subsidiary and that the Link group had ‘no obligation to contribute to any of those WEIF related liabilities’.

Link Administration’s shares shot to a high of $2.19 in early trade on the ASX this morning following news of the MUFG takeover. They were trading more than 27 per cent higher at $2.16 at 11.18am (AEDT).