Guess which ASX All Ords stock is leaping 10% on a $1.3 billion bid

Deal accepted! This beaten-up stock is heading off the ASX.

| More on:
Two CEOs shaking hands on a deal.

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 jumped 10.4% to $1.38 today after the All Ordinaries (ASX: XAO) stock accepted a $1.3 billion takeover bid.

Today's acquisition news and subsequent share price boost follow a challenging period for the employment and human services business as low unemployment rates chipped into client flows.

Let's take a look at the news.

Takeover bid accepted

In today's announcement, APM advised it has entered into a scheme implementation deed with Ancora BidCo Pty Ltd, an entity controlled by US-based private equity outfit Madison Dearborn Partners (MDP).

The accepted agreement means MDP will buy all remaining APM shares it doesn't already own for $1.45 cash per share, valuing APM at $1.3 billion.

While a previous bid from CVC Asia Pacific in February of $1.60 per share was higher than today's accepted offer, APM rejected it for being too low at the time, and CVC walked away.

In the latest deal, eligible APM shareholders will have the option to receive either 90% or 100% of their takeover consideration in unlisted shares in the acquisition entity.

If the scheme is implemented, executive chair Megan Wynne and APM CEO Michael Anghie intend to receive 100% unlisted shares in the acquisition entity for their APM shares.

Why is APM accepting this offer?

The APM independent board committee (IBC) unanimously recommends that shareholders vote in favour of the takeover in the absence of a superior proposal. This recommendation is subject to an independent expert concluding and continuing to conclude that the scheme is in the best interests of APM shareholders.

The IBC is positive on the offer, saying it provided a "significant premium" to the undisturbed APM share price and delivered certainty of value. It noted the APM share price may trade at a significantly lower price in the absence of the takeover offer, and there were no alternative viable proposals.

The IBC cited the "uncertainty of the near-term outlook" as a key reason to accept the offer. It added that the ASX All Ords stock "continues to operate in an environment of extended low levels of unemployment and client flows, with increased support provided to achieve sustainable employment."

While APM thinks these factors will "normalise over time" and that its other businesses can continue to grow, it is uncertain when this will occur.

The IBC also noted this offer allowed for shareholders to remain invested in APM, if they chose to do so.

Trading update

Also in a short trading update today, APM revealed it had experienced low client flows in Australia and the United Kingdom during April and May this year.

The company expects its FY24 profit to be "around the bottom" of its profit guidance range. FY24 underlying net profit after tax (NPATA) had been guided at between $95 million and $105 million, and underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was previously guided to between $280 million and $290 million.

Additionally, APM expects the activity levels in the second half of FY24 to be "likely to continue into FY25." It also noted that the completion of the refinancing of certain existing bank facilities was expected to result in a higher interest expense in FY25 compared to FY24.

What next?

APM will send shareholders a scheme booklet in July 2024, which will include information about the offer, the reasons for the IBC recommendation, an independent expert's report, and details of the scheme meeting.

A meeting will likely be held in September 2024 for shareholders to vote on the proposal. If accepted, implementation is expected to occur in October 2024.

APM share price snapshot

The APM share price has lifted more than 9% since the start of 2024, but it's been a bumpy ride for shareholders this year, as we can see in the graph below.

Motley Fool contributor Tristan Harrison has positions in APM Human Services International. 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

Teamwork, planning and meeting with doctors and laptop for medical, review and healthcare. Medicine, technology and internet with group of people for collaboration, diversity and support in hospital
Healthcare Shares

This ASX All Ords stock is rocketing 20% after accepting a takeover offer

These two diagnostics companies are planning to merge their operations.

Read more »

A man packs up a box of belongings at his desk as he prepares to leave the office.
Mergers & Acquisitions

What will happen to CSR shares next week?

It's a huge month for ASX veteran CSR this June...

Read more »

A female miner wearing a high vis vest and hard hard smiles and holds a clipboard while inspecting a mine site with a colleague.
Materials Shares

Guess which ASX 200 mining stock is making a $276m UK acquisition

BHP failed in its UK takeover attempt but this mining stock is having more luck.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Mergers & Acquisitions

Guess which ASX 200 share just rocketed 15% on a $1.8 billion takeover offer

Investors are snapping up this ASX 200 share following confirmation of a takeover offer.

Read more »

Two young male miners wearing red hardhats stand inside a mine and shake hands
Share Market News

Copper checkers: What's next for BHP shares after Anglo talks?

The miner's long term strategy hasn't changed.

Read more »

A woman holds up her hand in a stop gesture with a suspicious look on her face as a man sitting across from her at a cafe table offers her flowers.
Mergers & Acquisitions

BHP share price tumbles as $74 billion deal evaporates

BHP shares won’t be encompassing Anglo American’s copper assets after all.

Read more »

Three miners stand together at a mine site studying documents with equipment in the background
Materials Shares

BHP share price on watch after Anglo American takeover update

BHP is seeking an extension to its deadline to get a deal over the line.

Read more »

Miner looking at a tablet.
Mergers & Acquisitions

Should you buy BHP shares now before tonight's Anglo American takeover reveal?

ASX 200 investors should know tomorrow morning whether BHP will become the largest copper miner on Earth.

Read more »