(Bloomberg) -- Canadian software firm Dye & Durham Ltd. jumped as much as 21% after reaching a deal to to buy Australian data services firm Link Administration Holdings Ltd. for about C$3.2 billion ($2.5 billion).
The cash offer represents a premium of about 15% over Tuesday's closing price for Link, the Toronto-based company said in a statement. As part of the deal, Dye & Durham will also indirectly acquire Link Group's 43% ownership in the recently spun-out conveyancing business PEXA Group Ltd.
Dye & Durham closed up 11.3% at C$46.27 in Toronto, the biggest one-day increase since May 31, when the company announced a group of executives were proposing to take the company private. The buyout plan was called off after running into opposition from shareholders, and the firm said in October it would continue to pursue a growth-by-acquisition strategy as a public company.
The Link deal is its largest since then.
Just last month, the biggest back-office service provider to Australia's booming pension industry had received a renewed A$2.8 billion ($2 billion) offer from U.S. buyout firm Carlyle Group Inc. The private equity firm was granted due diligence to revise its indicative takeover proposal.
The late Tuesday announcement by Dye & Durham ends a yearlong race to acquire Link. Before last month's offer, Carlyle had made an approach in October 2020 in league with Australian private equity firm Pacific Equity Partners. That prompted Link to embark on a strategic review of its business.
Dye & Durham was attracted by “the overlaps between customers in their corporate markets business and in our core legal business,” Chief Executive Officer Matthew Proud said in a telephone interview. “It's a good, sticky business that's well entrenched and generates significant revenue cash flow we can redeploy.”
Dye & Durham said it plans to net about C$125 million of cost savings from the merger.
Meanwhile, Link's other segments including its funds solutions and banking and credit management businesses are “non-core” to Dye & Durham, and will be divested, according to the statement.
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