The sale of Pepper’s Irish business to Link Group has been terminated, after the Australian financial services administrator pulled out of the proposed €200 million deal.
In a statement to the Australian Securities Exchange on Monday, the Link board said it had not requested an extension to the sale and purchase agreement following its expiration on January 31st 2021.
It’s understood that the Covid-19 pandemic was a factor in Link’s decision to pull out, given the uncertainty and difficulty in transacting it has given rise to.
Link chief executive Vivek Bhatia told the Australian Financial Review that the regulatory process had been “elongated and challenging”, partly due to Covid-19. Link, which itself is in the process of selling its stake in Property Exchange Australia (PEXA), said it will now preserve the capital from the Pepper deal “for future growth opportunities”.
The deal, which was first announced in January 2020 and was at parent level, would have seen Link acquire Pepper European Servicing (PES), which includes Pepper’s Irish business, in a deal worth up to € 200 million. It was expected to lead to employees in Pepper’s Irish loan servicing team double to about 1,000. PES’s Pepper Ireland unit manages €18 billion of assets, including over 80,000 loans. It employs over 470 staff at its offices in Shannon and Dublin.
The transaction was referred to the Competition and Consumer Protection Commission (CCPC) in January 2020, and a determination was expected in the coming weeks. However, this ruling is no longer relevant.
Pepper, a diversified global financial services group with operations across Europe and Australasia, said it is now set to defer the sales process and focus on strategy to drive growth across European markets.
“Having strengthened our service capabilities significantly in recent years we are ideally positioned to capitalise on material growth opportunities in all our key European markets, accentuated by the growing need for highly specialised loan servicers to minimise the negative impact Covid-19 related challenges will have on consumers and financial institutions across Europe,” he said.