US private equity giant KKR and Nine Entertainment’s real estate listings company Domain Holdings have made a surprise $3.1 billion bid for the online property conveyancer PEXA, asking its owners to either accept or reject the bid by 5pm this Sunday.
Link Administration, which is the largest shareholder in PEXA with a 44.2%, confirmed the offer on Thursday evening.
Will the move by Domain and its US partners see rival listing company, the 61% controlled News Corp subsidiary REA Group, launch a counter offer?
Even though PEXA is not working smoothly, the push in real estate is towards online transactions, so control of this business would be vital to online sites like Domain and REA.
There are a number of rival online conveyancing sites – the biggest is Simpli. Perhaps REA will go off and buy that or starting collecting smaller businesses into one group.
After several aborted bids for Link in the past couple of years – most of which were really attempts to grab control of PEXA which is the pioneer in online property conveyancing and settlements – Link decided to go ahead with a plan to float PEXA on the ASX.
KKR and Domain want Link to drop that idea.
Link, which is exploring a sale either to private buyers or via in initial public offering, said it is considering the proposal in a statement on Thursday night.
“As no decision has been made, both the trade sale process and exploration of the viability an IPO continue to proceed,” it said.
The Link announcement said Domain, the real estate listings portal that is 60% owned by Nine Entertainment is expected to join with KKR.
The $3 billion value is plus cash on the balance sheet as at date of settlement. Link said PEXA had cash of $126 million at the end of March. There was no split between a per share price and the amount of debt in PEXA.
The $3.1 billion gives a value for the Link stake in PEXA around $1.38 billion.
Non-binding offers from both Pacific Equity Partners/Carlyle and US group, SS&C Technologies for Link failed on the basis of due diligence and price.
Analysts suggested a deal valuing all of PEXA in the range of $2.5 billion to $3 billion when Link started exploring bids earlier this year.
Link said the offer from KKR was based on these conditions:
“Agreement on transaction documentation, including a Sale and Purchase Agreement; Foreign Investment Review Board approval and relevant approvals from the State land registries; and Agreement by PEXA shareholders to a number of actions and waivers under the existing PEXA Shareholders’ Deed and to the IPO not proceeding.”
Link shares closed at $5.19 on Thursday on the ASX.
