Why the Altium (ASX:ALU) share price is crashing 14% on Monday

This tech share is crashing lower on Monday morning…

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The Altium Limited (ASX: ALU) share price has come under significant pressure on Monday morning.

In early trade, the electronic design software company’s shares sank as much as 14% to $31.47.

The Altium share price recovered slightly to be down 10.5% to $32.73 before being paused.

Why is the Altium share price sinking?

The Altium share price was sold off this morning amid speculation that the company has rejected another takeover offer from Autodesk. This follows the rejection of a $38.50 per share offer from the US software giant in June.

According to the AFR, on this occasion, Autodesk returned with an improved offer of $40.00 per share with the same conditions from its previous approach. These conditions include the granting of formal due diligence and board recommendation.

However, the increase of 3.9% to $40.00 per share was reportedly deemed insufficient by the Altium board, leading to its rejection.

Judging by the Altium share price reaction today, it appears as though investors believe this marks the end of Autodesk’s interest and no higher offer will be made.

Why did Altium reject the offer?

Altium has yet to confirm the receipt of this offer. However, if it did receive and subsequently reject the offer, it will most likely be for the same reasons as its previous rejection.

At that point, the Altium Board revealed that it believed the proposal significantly undervalued Altium’s prospects.

It commented: “Altium has a unique position in the electronics ecosystem and in the past unsolicited acquisition interest has developed from partnership dialogues with others in the ecosystem. As consistent with past unsolicited acquisition interest, the Altium Board will engage with interested parties in the context of an appropriate valuation of Altium and it will continue to review all potential strategic alternatives for the Company.”

“Altium’s strong track record of setting ambitious long-term goals and achieving them, gives the Altium Board confidence in the Company’s ability to pursue its transformative strategy for the electronics industry and to achieve its 2025 financial goals. Having successfully pivoted to the cloud, Altium is now well positioned to pursue market dominance and industry transformation. The adoption of Altium’s cloud platform is transforming Altium’s business model from maintenance based subscription to capability-based SaaS subscription,” it added.

It is worth noting that although the $40.00 per share offer is a large premium to the Altium share price pre-approach, it is still a discount to pre-pandemic 2020 highs of ~$42.00.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Altium. The Motley Fool Australia owns shares of and has recommended Altium. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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