(Bloomberg) -- A consortium led by Carlyle Group and Pacific Equity Partners has offered to acquire Link Administration Holdings Ltd. for about A$2.76 billion ($2 billion), a further sign Australia's deals pipeline is restarting.
The group is offering A$5.20 per share in cash for Link in a non-binding proposal, according to a statement Monday. The offer price represents a 30% premium to Friday's close for Australia's biggest service provider for its pension industry. Major shareholder Perpetual Ltd. -- which manages retirement savings and owns 9.65% of Link -- said they would support the deal, providing a superior offer doesn't come.
The proposal also includes an alternative to let shareholders keep the company's Pexa business unit through an offer of shares instead of cash or a rollover of existing shares alongside the consortium, according to a shareholder notice filed by the buyout group. Pexa is an online property exchange that a consortium including Link and Commonwealth Bank of Australia bought for $1.6 billion in 2018.
The bid from Link's former owner in PEP comes as the firm's shares traded more than 40% below their January high. It is also about 18% below the offer price of A$6.37 apiece when PEP listed Link in 2015. Shares jumped as much as 28% on Monday when trading resumed following the announcement.
The offer is “is not something that we would consider to be absolutely compelling,” said Dion Hershan, managing director and head of Australian equities at Yarra Capital Management, which is Link's second-biggest shareholder. The price undervalues Link including its “materially under-appreciated” Pexa business, he said in an interview before the notice including details of the Pexa rollover offer emerged.
Any deal would mark the largest acquisition by private equity firms in Australia since KKR & Co.'s $2.2 billion purchase of Australian snacking icon Arnott's Biscuits from Campbell Soup Co. last year, according to data compiled by Bloomberg. Dealmaking in the country has been on the rise. Last week, Northern Star Resources Ltd. proposed to acquire Saracen Mineral Holdings Ltd. in a deal that could create an A$16 billion gold producer.
Read more: Macquarie Becomes Australia's No. 2 Arranger After Gold Deal
The offer for Link comes as Australia's prudential regulator expects the nation's pension pot to almost double to A$5 trillion by 2034 as employers put 9.5% of a worker's wage into a retirement fund each month. Still, funds themselves are facing pressure to consolidate and cut fees amid increased regulator and government scrutiny over performance.
Read More: Australia Targets Underperforming Pension Funds in New Crackdown
Macquarie Group Ltd., UBS Group AG and Herbert Smith Freehills are advising Link. Jarden Securities Ltd. and Nomura Holdings Inc. and Gilbert & Tobin are advising the consortium.
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