APM share price placed on ice as $1.8 billion deal goes dud

It's all question marks and raised eyebrows for shareholders of this ASX company today.

| More on:
A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The APM Human Services International Ltd (ASX: APM) share price has become an immovable object today as shares enter a trading halt.

Stationary at $1.63 apiece, the employment and health services provider's shares are locked down until the company responds to the latest development in its pursuit by a private equity firm.

Currently, APM shares are up 29.4% for the year. Meanwhile, the S&P/ASX 300 Index (ASX: XKO) — which APM is a member of — is up a meagre 2.2%.

Pulling the plug

CVC Asia Pacific is now walking away from acquiring APM after serving up a more generous bid on 28 February of $2.00 per share.

Details are sparse right now. All that was said in this morning's trading halt request was APM had been advised, by way of letter, that it is 'unable to proceed to finalise a transaction on terms consistent with their non-binding offer as disclosed to the ASX on 28 February 2024'.

This doesn't give investors much insight into why CVC has chosen to walk back its takeover intentions. One would hope that APM will give clarity when it delivers its response to the decision. However, there is also a chance the private equity firm didn't elaborate to APM either.

CVC outlined several conditions for its revised takeover bid in February. These included key APM personnel accepting most of the payment as shares. Furthermore, the deal was subject to due diligence and debt financing.

At this stage, it is unclear which of the above items (if any) were the stumbling block for the takeover.

What could it mean for the APM share price?

APM shareholders could be slightly worried about how the share price fares once trading resumes. For context, APM shares were hovering around 84 cents before rumours of an approach surfaced last month.

If the company's shares were to head back to 84 cents it would represent a 48% fall from its current stature.

However, at that price, APM would trade on a trailing price-to-earnings (P/E) ratio of 10.5 times. Meanwhile, the average P/E ratio for the global professional services industry sits at 21.3 times earnings.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended APM Human Services International. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Mergers & Acquisitions

Smiling elderly couple looking at their superannuation account, symbolising retirement.
Financial Shares

Suncorp share price hits new 52-week high amid $375m asset sale

Suncorp is offloading another asset as it reshapes its business.

Read more »

a woman drawing image on wall of big fish about to eat a small fish
Mergers & Acquisitions

Guess which ASX 300 stock is jumping 9% after receiving a takeover offer

A South Korean chaebol has its eyes on this stock.

Read more »

Young man sitting at a table in front of a row of pokie machines staring intently at a laptop. looking at the Crown Resorts share price
Mergers & Acquisitions

Could Star Entertainment shares be next in line to catch a takeover bid?

Star shares have been battered, but could a buyout be coming?

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Bank Shares

Own CBA shares? Here's the tech stock the banking giant just invested in

CBA has made an interesting investment. Here's what you need to know.

Read more »

Man pointing at a blue rising share price graph.
Mergers & Acquisitions

Guess which ASX 300 stock is rocketing 10% on a $985 million cash bid!

Investors are piling into the ASX 300 stock on the back of a $985 million cash takeover bid.

Read more »

Shot of a scientist using a computer while conducting research in a laboratory.
Mergers & Acquisitions

Guess which ASX blue-chip share is throwing $202 million at another acquisition

This Aussie healthcare company is growing its presence in Switzerland.

Read more »

A man stands with his arms crossed in an X shape.
Mergers & Acquisitions

Boral share price falls after rejecting Seven Group takeover

The offer 'undervalues' Boral according to its committee.

Read more »

Miner looking at a tablet.
Materials Shares

Mineral Resources share price marching higher on new lithium project acquisition

ASX 200 investors are bidding up the Mineral Resources share price on Monday.

Read more »