Link Administration (ASX:LNK) and Ramsay Health Care (ASX:RHC) fell 20% and 10%, respectively, on September 13. Their decline bucked the broader market trend as ASX shares generally rose, marking the stock market’s fourth day of consecutive gains. LINK and RCH shares plunged after each of their respective buyout deals were thrown into serious doubt.
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LINK shares sink as UK threatens to thwart its takeover by Dye & Durham
Link Administration provides administrative services to the financial sector in areas such as share registry and investment funds. It has customers in Australia and the UK. Link agreed to be acquired by Canada’s Dye & Durham for $AU2.5 billion.
Link’s shareholders recently voted overwhelmingly in support of the transaction. However, the deal has run into problems that threaten its completion. UK’s Financial Conduct Authority (FCA) will not approve the transaction unless Link sets aside up to AU$519 million to cover potential fines.
Link’s UK subsidiary Link Fund Solutions (LFS) is the subject of a probe that could result in fines. Link has rejected the FCA’s demand, but tussle casts doubts on the deal, as the UK regulator’s approval is required to complete the transaction.
Ramsay Health Care drops as KKR refuses to boost buyout offer
Sydney-based Ramsay provides healthcare services. It operates private hospitals and surgery facilities. The company has been in business since 1964 and operates in several countries.
U.S. private equity firm KKR teamed up with other investors to place a buyout bid for Ramsay earlier this year. The takeover plan has since undergone a series of twists and turns. The group initially offered to acquire Ramsay for AU$88 per share, but revised the offer downward after Ramsay reported a decline in its annual profit. Ramsay has been pushing the KKR-led consortium to boost its offer. So far its a stalemate situation, with neither party willing to budge, leaving the deal up in the air.
Link Administration share price prediction
Link shares have dropped 15% over the past week and are down about 35% year-to-date. Despite the doubts surrounding Link’s takeover by Dye & Durham, analysts have so far remained bullish on the LNK shares. According to TipRanks’ analyst rating consensus, LNK stock is a Hold based on two Buys, three Holds, and one Sell. The average Link Administration share price prediction of AU$4.67 implies over 30% upside potential.
Link Administration stock is receiving favourable mentions on financial blogs. TipRanks data shows that financial blogger opinions are 86% Bullish on LNK, compared to a sector average of 70%.
Ramsay Health Care share price forecast
Ramsay shares have dropped more than 10% over the past week and are down about 12% year-to-date. Despite Ramsay’s KKR buyout issues, analysts still believe that Ramsay shares are worth a place in investors portfolio. According to TipRanks’ analyst rating consensus, RHC stock is a Hold based on three Buys and one Hold, and two Sells. The average Ramsay Health Care share price forecast of $AU78.93 implies nearly 25% upside potential.
Moreover, Ramsay stock remains a favourite on financial blogs. TipRanks data shows that financial blogger opinions are 85% Bullish on RHC, compared to a sector average of 69%.
Final thoughts
With declining market values, ASX companies are becoming buyout targets for domestic and foreign investors. Therefore, if the current takeover deals for Link Administration and Ramsay Health Care fall through, the company could still draw interest from other potential buyers in the future.
