Shares of Link tumbled as much as 10.2% to hit their lowest since May 15, 2020 after the news came in, while the broader market rose about 1%.

The proposed deal will give cloud-based software firm D&D access to Link's prized 42.8% stake in PEXA Group Ltd, which listed last July after Link rejected a bid by KKR & Co to buy the online realty firm.

The Australian Competition and Consumer Commission (ACCC) said in a statement that while the merger of D&D and Link itself did not raise any issues, aligning PEXA with D&D could significantly increase vertical integration in the conveyancing sector.

"Consumers may not be familiar with these companies in name, however this acquisition is relevant to anyone buying or selling property," ACCC Deputy Chair Mick Keogh said.

He said the regulator had "significant" preliminary concerns that the deal would enable D&D and PEXA to engage in mutually preferential dealings.

Link said the statement was the regulator's preliminary view, and maintained its earlier stance that the offer was fair and reasonable to its shareholders.

PEXA declined to comment, while D&D did not immediately respond to a request for comment.

In December last year, the Canadian company offered Link shareholders A$5.50 ($3.85) in cash for each share, topping a bid put forth by Carlyle Group.

D&D provides cloud-based software and technology solutions to several businesses, including lawyers and conveyancers. PEXA's PEXA Exchange product allows users to complete property settlements electronically via a process called e-conveyancing.

($1 = 1.2891 Canadian dollars)

($1 = 1.4294 Australian dollars)

(Reporting by Harish Sridharan in Bengaluru; Editing by Subhranshu Sahu)