Embattled APM in trading halt ahead of update on Madison Dearborn Capital Partners’ buyout offer

Struggling employment and disability services provider APM could be just days away from revealing it has struck a $1.3 billion-plus buyout deal.

The Michael Angie-led company has been in talks with Madison Dearborn Capital Partners for almost two months after the private equity backer lobbed a low-ball $1.40-a-share offer.

Madison Dearborn, which helped to list APM in a disastrous public float in November 2021, already controls about 30 per cent of the company’s register but now wants to take full control and return the company into private hands.

The board at the time branded the offer “disappointing” but it remains to be seen if APM has been able to convince Madison Dearborn of the merits of a higher offer after more than seven weeks of talks.

Just a day after the bid was disclosed on April 8, analysts at Ord Minnett said there was “zero” possibility of a deal proceeding if the bid remained at $1.40 — which is now only an 11.3 per cent premium to Thursday’s closing price of $1.25.

It’s also a far cry from the $3.55-a-share initial public offer price that would crystallise massive losses for founders of the Perth-based company.

APM on Friday placed its shares in a trading halt pending an update on the non-binding offer, which was being assessed by an independent board committee chaired by Nev Power and includes former WA treasurer Ben Wyatt.

Madison Dearborn snapped up its slice of APM from Quadrant Private Equity in 2020. Along with founder Megan Wynne and her Perth IVF specialist husband Bruce Bellinge, the trio control about 64 per cent of APM’s stock.

Ms Wynne and Madison Dearborn were the big winners from the company’s disastrous $3.3b float. Ms Wynne and Mr Anghie received $30.4m and $40.9m, respectively, from the selldown.

Madison Dearborn, which already has three directors around the table, said its proposal was contingent on the backing of APM’s full board.

The offer also includes a rollover election for APM shareholders to receive all or part of the consideration in unlisted shares in the acquisition entity. It would also require certain shareholders — including Ms Wynne and founding related parties, Mr Anghie and key management — to agree to receive all of their consideration in scrip.

APM at the time said the offer did not require exclusivity and it could still engage with other potential suitors.

But no other suitor has so far stepped forward, and given Madison Dearborn’s hold on the company — and the fact that fellow equity giant CVC walked away from an improved $2-a-share offer in mid-March following four weeks of due diligence — the chance of a vastly improved price seems slim.

APM is also in the midst of a company-wide detailed review after it warned investors last month that it continued to suffer operational pressures because of persistently low levels of unemployment.

It said the review would focus on cost-saving and efficiency measures that would start this quarter and aim to save $25 million.

It also suggested a typically strong performance in the fourth quarter was unlikely to occur this year and it had again downgraded its underlying earnings for the full year to between $280m and $290m — down from $365m a year earlier. Net profit is expected to come in at between $95m and $105m — well down on the previous year’s $178m.