APM mulling new CVC takeover offer at $2 a share, confirms huge profit drop

Beleaguered Perth-based APM is considering a revised $2-a-share takeover proposal from private equity group CVC after confirming a massive drop in interim profit and the scrapping of its dividend.

The new $1.8 billion proposal, if backed by the APM board, would see the management and founders retain significant ownership of the privatised group.

Having rejected a $1.60-a-share offer from CVC two weeks ago, APM on Wednesday revealed the employment and disability services company was considering the new bid and had granted the suitor four weeks of exclusive diligence.

APM said the proposal was conditional on founder and executive chair Megan Wynne and chief executive Michael Anghie taking up shares in CVC’s bidding vehicle in exchange for their holdings in APM.

Net earnings for the six months to December 31 plunged to $7.2 million from $38.9m (down 81.5 per cent) for the same period in 2022. The result included a forecast 35.6 per cent drop in underlying net earnings to $55m from $85.3m.

The revised proposal is still well short of the $3.55 a share at which APM listed on the ASX via WA’s biggest stock market float in 2021.

Ms Wynne, who founded APM in 1994, and US private equity group Madison Dearborn control more than 60 per cent of the company.

APM shares closed at $1.41 on Tuesday.

APM said on Wednesday that its directors had “determined that it is in the best interests of APM shareholders to re-engage with CVC and to grant CVC a four-week period of exclusivity to March 27”.

The offer, which would come with a scrip alternative, will be reviewed by an independent board committee headed by Nev Power and including former WA Treasurer Ben Wyatt.

The warning of the drop in first-half profit at the annual general meeting in November and then confirmation of the fall last month triggered share price plunges that took APM from above $2 to record lows under 70¢.

Assuming a formalised bid is successful, CVC would emerge with 33 per cent of APM, with Ms Wynne, Mr Anghie, other senior executives and Madison Dearborn holding the balance.