Why the Link Administration share price has popped 9% today

Link Administration Holdings (ASX: LNK) shares are up more than 9% today after announcing a $266 million European acquisition from Pepper Group.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Link Administration Holdings Ltd (ASX: LNK) share price is rocketing today after the company announced it has acquired Pepper European Servicing for A$266 million. At the time of writing, Link shares up by 9.58% in morning trade to be going for $6.81. 

Why are Link Administration shares popping today?

Pepper European Servicing (PES) is a subsidiary of Pepper Group, which provides end-to-end loan servicing, advisory and asset management across both residential and commercial segments.

Link Administration is to acquire 100% of PES for A$266 million with a further A$56 million in contingent consideration.

The transaction will be financed from existing cash and bank facilities, but further share buybacks will take into account Link's increased leverage.

PES is well-established across the UK and Ireland with a growing presence in Spain, Greece and Cyprus.

At 31 December 2019, PES had total assets under management (AUM) of ~A$65 billion and generated income of ~A$149.9 million. The upfront acquisition price implies an enterprise value to earnings before interest, tax, depreciation and amortisation (EBITDA) multiple of 8.2x.

Link Administration sees the transaction as being 10% accretive to its operating earnings per share in year one and a further 5% to 6% with anticipated synergies over the medium term.

The transaction is subject to regulatory approvals and expected to be completed in the second half of 2020. PES will be integrated with Link Group's banking and credit management (BCM) business.

Link Administration shares are worth keeping an eye on today as the market continues to digest the acquisition news.

How has the company's share price performed recently?

The Aussie financial administration platform has had a difficult run in the markets in recent times. Link Administration shares crashed lower in late May 2019 after downgrading its FY19 operating EBITDA and operating NPATA expectations.

Prior to today's gains, the company's share price was down 13.03% in the last 12 months and 9.61% in the last 5 years. However, this includes a rebound of 32.69% since mid-August and that positive momentum has continued into 2020.

Should you invest $1,000 in Link Administration right now?

Before you buy Link Administration shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Link Administration wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Link Administration Holdings Ltd. The Motley Fool Australia has recommended Link Administration Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Mergers & Acquisitions

A corporate team or board stands together and looks out the window.
Technology Shares

WiseTech shares charge higher on $3.5b acquisition news

This tech stock is ending the week positively. But why?

Read more »

Two CEOs shaking hands on a deal.
Financial Shares

This ASX 300 stock is jumping on surprise merger news

This stock could be having a very big makeover.

Read more »

A graphic showing three hands holding red paddles with the word BID, indicating a bidding war for an ASX share company
Mergers & Acquisitions

Guess which ASX All Ords stock just received a new takeover offer

Let's see which stock is in the crosshairs of a rival.

Read more »

Man with rocket wings which have flames coming out of them.
Technology Shares

Guess which ASX All Ords stock is rocketing 34% on takeover deal

This stock looks set to leave the ASX boards in the near future after accepting a takeover deal.

Read more »

Two miners standing together.
Gold

Northern Star Resources set to buyout rival De Grey mining

As gold soars, ASX miners continue to mine the acquisition pipeline.

Read more »

Man with rocket wings which have flames coming out of them.
Mergers & Acquisitions

Guess which ASX 300 stock is rocketing 15% on big takeover offer

Not every share is being dragged lower on Monday.

Read more »

Happy woman holding white house model in hand and pointing to it with a pen.
Mergers & Acquisitions

Up 70% this year, Domain share price wobbles on CoStar takeover update

Domain released an update on CoStar’s $2.8 billion takeover bid.

Read more »

Man with rocket wings which have flames coming out of them.
Mergers & Acquisitions

Guess which ASX stock is up 100%+ on takeover deal

This share is catching the eye on Thursday. Let's see what is happening.

Read more »