The parent company behind authorised corporate director Link Fund Solutions (LFS) confirmed on Friday that its proposed acquisition by a Canada-based software firm has collapsed, throwing into doubt a healthy pot of cash that could have been paid out to investors still trapped in Neil Woodford’s (pictured) defunct equity income fund.
Australia-headquartered Link Group was to be sold to Dye & Durham Corporation, but the deal fell at the final hurdle after the UK financial watchdog intervened.
The FCA greenlit the acquisition of six of the seven UK-based Link Group entities. The exception was LFS, which has been mired in the long-running Woodford Equity Income Fund saga, which marked its third anniversary in June.
To secure a regulatory clean sweep, Link Group was required to set aside £306m to fund restitution to investors, plus pay a £50m penalty.
Link Group sought to distance itself from the FCA’s demands last week, stating it “has not made any commitment to fund or financially support LFS”, adding “LFS will explore all options, including challenging any warning notice” as it “does not agree with the FCA’s view”.
On Friday, Link Group shareholders were advised that the outstanding conditions for sale had not been satisfied before the deadline and “there is no expectation that the outstanding conditions precedent for the transaction will be satisfied”.
As a result, the court dismissed proceedings and the deal collapsed.
Dye & Durham CEO Matthew Proud said his team was “disappointed with this outcome given the significant time and resources invested in managing this process over the last 10 months”.
What is not clear at this stage is when, or even if, the FCA’s demand for cash will bear fruit. Link Group has made clear via various stock exchange announcements that it does not agree it is liable to set aside the £306m or pay the £50m penalty.
While Link Group was in the midst of an acquisition, with fixed court dates and deadlines, the FCA had greater leverage—’set aside the money and the acquisition of LFS will be approved’.
But with the deal off the table and Link Group geared up to fight back, investors hoping for an imminent conclusion to this sorry saga are likely to be disappointed yet again.