Link Administration Holdings Limited Manages Strong Acquisition Interests

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Link Administration Holdings Limited Manages Strong Acquisition Interests Ahead Of 2H22 Results

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Link Administration Holdings Limited (ASX:LNK) updates shareholders on mounting acquisition interests in its annual general meeting presentation, and expects growth ahead of 2H22 results.

  • FY21 operating Earnings Before Interest and Tax (EBIT) up 21 per cent at A $141 million
  • FY21 operating Net Profit After Tax and Amortisation (NPATA) down 18 per cent at A $113 million
  • Announced new €65 million acquisition offer for Banking & Credit Management business

Since December last year, Link Administration Holdings Limited (ASX:LNK) has presented its shareholders with a number of takeover interests, expressed by international parties. Of these proposals features one by The Carlyle Group Inc (NASDAQ:CG), which involves the full acquisition of Link Administration by way of a scheme of arrangement. Initially presented on 5 November, the proposal saw Link Administration updating shareholders on the details of the Carlyle offer, without need for action. Link Administration’s Annual General Meeting (AGM) presentation published today, presents a strong signal of the Carlyle proposal moving forward.

True to its nature as a data services provider, Link Administration held its AGM with shareholder presentation and Chair and Managing Director speeches delivered in a hybrid format. The company commenced its presentation with a recap of Link Administration’s strengths as a provider of innovative technology solutions. This recap includes reflections on challenges and new direction faced in FY21, as Link Administration prioritised diversification of its revenue streams, maintaining strong capital and cash conversion as a method of resilience amid pandemic market conditions.

More importantly, Link Administration managed recurring revenue levels at 85 per cent, with strong performance in other financial metrics for FY21. Along with its improved cash conversion at 114 per cent, the company reported operating EBIT up 21 per cent at A $141 million, and operating NPATA down 18 per cent at A $113 million. Link Administration presented its FY21 performance as a ‘year of consolidation’, primarily due to pandemic impacts upon its European business segment. However, Link Administration’s performance despite these impacts is also the result of its focus on global transformation efforts, which the company expects to bring additional benefits for FY22.

The company provided FY22 guidance which anticipates its operating EBIT to fall in line with FY21 performance, with growth resuming in 2023. Link Administration provided no change to its FY22 guidance in today’s AGM presentation. Commenting on the company’s strong start to FY22, Chief Executive Officer (CEO) and Managing Director Vivek Bhatia mentions how “tailwinds have come to fruition and (...) we are now reaping the benefits”.

Carlyle Group Offer Update and Additional Acquisition Interests

Link Administration provided updates on a number of pending acquisition offers that it received of late. Of these offers, the company highlighted further progress on the Carlyle Group’s proposal to fully acquire Link Group at A $3 per share. Moving forward with the proposal, Link Administration’s board has provided Carlyle with due diligence to develop a revised proposal that it can recommend to Link Administration shareholders.

Additionally, the company reports mounting acquisition interest for its Banking & Credit Management (BCM) business. Link Administration first received an acquisition proposal by a Pepper European Servicing (PES)-led syndicate on 12 November this year. While the total offer is valued at €55 million, Link Administration has since received another proposal by LC Financial Holdings (LCFH) to acquire BCM for a total of €65 million. Link Administration’s board will provide both the PES syndicate and LCFH with access to due diligence information.

Louis Mosmann

Louis Mosmann is a Private Wealth Client and Research Assistant at KOSEC- Kodari Securities. Louis covers macroeconomic events, global markets and ASX300 company announcements, allowing clients to make more informed investment decisions. Email Louis at l.mosmann@kosec.com.au.

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