Mitsubishi UFJ Financial Group (8306.T) will be buying Australian pension administration firm Link Administration (LNK.AX) in a A$1.2 billion ($802.7 million) deal. This news comes as Mitsubishi UFJ Financial Group Japan’s largest banking group boosts its fund administrator business.
The deal with Australian pension administration firm Link Administration represents Mitsubishi UFJ‘s seventh acquisition in the fund administration industry in the decade. The past deals including UBS Asset Management’s alternative fund services business in 2015.
Link Group’s roller coaster ride
The board of troubled superannuation and share registry administrator Link Group is backing a $1.2 billion buyout offer from Japanese financial services company Mitsubishi UFJ Financial Group in a deal which is set to end eight years of misery for Link shareholders.
MUFG has offered $2.10 a share, plus a 16¢ dividend, for Link, ending a rollercoaster ride over the past three years when four other suitors attempted takeovers. The bid has been made by MUFG subsidiary The Trust Bank. Link chairman Michael Carapiet said after substantial restructuring of Link, the share market had not valued the company highly enough as a standalone entity.
“There’s no point whingeing about it. That’s the price the market has set on you,” Mr. Carapiet said.
What Link shareholders will receive?
Link Administration said its shareholders will receive A$2.10 in cash, or A$1.11 billion in total, in addition to a dividend of A$0.16 per share to be paid by the company, implying an enterprise value of A$2.1 billion.
The purchase price marks a 23.5% premium to Friday’s closing price.
Mitsubishi UFJ Financial Group plan
Mitsubishi UFJ Financial Group , which had a 6.4% stake in the share registry firm as of Nov 27, said in a statement the acquisition “will enable MUFG to further accelerate its global business expansion via access to Australian funds and global corporate clients.”
An executive at the Japanese banking group Mitsubishi UFJ Financial Group told a media briefing that Link will help the group expand in new markets such as Canada and the Netherlands, and boost the efficiency of its fund administration business by consolidating some operations.
The share purchase, which is expected to take place from June 2024 onwards, is subject to shareholder approvals as well as court and regulatory authorities.
Link board on the proposal
The Link board said it recommends that its shareholders vote in favor of the scheme in the absence of a superior proposal.
Link is the largest Australian pension administration company, providing services to 10 million accounts, or approximately 41% of Australian private pension members.
It also provides the share registry business in Australia, Britain and India. The Mitsubishi UFJ executive said the group plans to maintain its partnership in shareholder identification services with Georgeson, a unit of share registry service giant Computershare (CPU.AX).
Multiple ceased takeover bids
Since the last takeover talks ceased, the company has been on a turnaround path, sealing the sale of its UK-based fund solutions unit to the Waystone Group after a run-in with Britain’s Financial Conduct Authority for administering a now-collapsed fund run by former star money manager Neil Woodford.
Overseas M&A activity from Japanese banks has been notable in recent years as ultra-low interest rates at home pushed executives to seek higher returns in places from Asia to the US. Those foreign expansions helped to buoy profitability during their recent results where earnings hit an all-time high for the first half.
