APM receives ‘disappointing’ takeover offer

APM Human Services has received a “disappointing” cash offer from its second largest shareholder Madison Dearborn Partners, 80 cents below the previous bid.

The employment and disability services contractor told the market US private equity player Madison Dearborn had outlined its takeover bid after the previous $2 cash per share offer from CVC felt through.

MDP is proposing to acquire the remaining 70 per cent of shares in APM it doesn’t hold for $1.40 cash per share through a scheme of arrangement, to be on a non-exclusive basis.  

The $1.40 cash per share offer values APM at about $1.28 billion, less than half of its listing price $3.55 per share and value of $3.3 billion when it debuted on the market in 2021.

APM's shares are trading down 28.5 per cent to $1.165 apiece off the back of this morning's announcement.

MDP holds an about 30 per cent stake in APM behind Megan Wynne & Bellinge Holdings Pty Ltd with 34 per cent, being founder Ms Wynne and her reproductive biologist husband Bruce Bellinge.

The new bid includes a rollover election for APM shareholders to receive all or part of the consideration in unlisted shares in the acquisition entity.

It also proposes that certain shareholders, namely Ms Wynne, Michael Anghie and other key personnel, to elect to receive all of their consideration in scrip.

APM’s previously formed independent board committee (IBC) – led by chair Nev Power and including former WA treasurer Ben Wyatt – is responsible for engaging with the bidder and other interested parties.

Speaking on behalf of the committee, Mr Power said the offered price was disappointing.

He said shareholdes were advised to take by action over the $1.40 cash per share bid.

“The MDP proposal does not require exclusivity and allows the company [APM] to engage with other potential acquirers,” Mr Power said.

“The IBC together with its advisors intend to engage with MDP and any other interested parties to determine whether an appropriate proposal can be put to shareholders having regard to other alternatives including remaining listed and pursing the growth opportunities available to the company.”

Today’s announcement comes after APM requested an extension to its voluntary suspension after confirming MDP had stated its intention to submit an offer.

It came after CVC’s $1.8 billion takeover offer fell though, leading APM to request the initial voluntary suspension to assess other offers.

Meanwhile, APM reiterated that its employment services business was operating in an environmental of extended low levels of unemployment, reducing client flows.

APM said its Australian health business had invested in a new client management system that had temporarily impacted productivity, but benefits were expected to be realised in financial year 2025.

It said it anticipated lower FY24 underlying EBITA and underlying net profit to be in the range of $280 million to $290 million and $95 million and $105 million, respectively.

The contractor also said it commenced a detailed review of all areas of its business and had identified a number of initiatives to improve productivity and efficiency to support the delivery of services.

APM executive chair Ms Wynne said in the current challenging operating environment APM continued to deliver outstanding client outcomes and contract performance. 

"We remain positive on our outlook for FY25, which is underpinned by recent contract awards," she said. 

"These are further significant opportunities for future growth supporting underserved populations within the employment services, health, disability and aged care sectors."