Dye & Durham’s purchase of Australia’s Link Group is a huge overseas acquisition for the Toronto-based firm. Pending shareholder and regulator approval, the deal would be “transformational,” combining D&D’s services in automating legal paperwork in multiple markets with Link’s portfolio of products in pension-plan administration and corporate share management.

D&D would metamorphose into a much bigger company: its revenues in its last fiscal year totalled $208.9 million; Link’s were the equivalent of $1.08 billion.

D&D’s chief operating officer Martha Vallance told The Logic the company sees many opportunities to cross-sell. A law firm that already uses D&D’s filing services might recommend Link’s shareholder-registry offerings to a client company when it goes public, for instance.

What they have in common:

They both operate in the U.K. and Australia, and D&D likes that they both offer “digital infrastructure-like assets that provide essential services to clients and their customers and generate stable and sustainable cash flows,” according to the statement announcing the deal.

What they don’t:

D&D plans to offload Link’s divisions that offer banking and credit management and investment-fund management services. Vallance said the services D&D wants are “all what we would call mission-critical,” she said, and those aren’t.

Where you’ve heard that name lately:

• Dye & Durham has been on an acquisition spree, buying Telus’s financial-solutions business for $500 million earlier this month.
• But also, in November, the company jacked up the price of its real estate products in B.C., after doing something similar in other provinces.
• “We always view this as appropriately pricing our products for the value they deliver,” Vallance said, but D&D hasn’t yet done the math on Link’s current offerings.

Where the money is coming from:

Mostly debt, in transactions that bet the company on the success of the deal.

• D&D said it’s borrowing the equivalent of $3.25 billion for the Australia acquisition, from a consortium of lenders that includes Goldman Sachs, J.P. Morgan Chase and Ares Capital. The loan has a seven-year term and “will be secured by substantially all the assets of the company.”
• It’s also issuing up to $841 million in preferred shares and $109 million in common shares (at a premium price of $53 each) to Ares. The preferred shares bear 6.5 per cent interest, rising one point a year after five years to a maximum of 12 per cent. Both D&D and Ares have rights to convert the preferred shares to common shares in certain circumstances.
• D&D said it believes it can save $125 million through “cost synergies.”

How the markets reacted:

Positively. Dye & Durham’s shares traded at about $41 Tuesday, before the deal was announced. Wednesday morning, they bounced to $48.50 before settling at $46.18 at close.