Struggling APM accepts ASX exit plan with $1.3b buyout offer from majority backer Madison Dearborn

APM has laid out its escape plan from the Australian Securities Exchange, which will come less than three years after a much-hyped entry to the market that delivered a huge windfall for its Perth founders but has since disappointed investors.

The struggling employment and disability services provider on Monday confirmed an article published by The West Australian on Sunday that it had accepted an improved $1.3 billion offer from major backer Madison Dearborn Capital Partners to return the group to private hands.

That’s almost $2b short of APM’s $3.3b market value when it floated at $3.55 a share in November 2021, and will crystallise massive losses for true believers who bought into the listing.

APM said a scheme implementation deed with the Chicago-based private equity firm’s Ancora BidCo at $1.45-a-share represented a 74.7 per cent premium to its 83¢ share price before suitors started circling the company after a horror set of half-year results in January confirmed profit downgrade warnings issued in November last year.

Madison Dearborn already controls about 30 per cent of APM’s register, with founder Megan Wynne and her Perth IVF specialist husband Bruce Bellinge holding about 34 per cent.

Ms Wynne, chief executive Michael Anghie and Madison Dearborn were the big winners from the company’s float in November 2021, with Ms Wynne and Mr Anghie receiving $30.4m and $40.9m, respectively, from their selldown.

APM shareholders will have the option to receive either 90 or 100 per cent of the consideration in unlisted shares, or can elect to accept cash.

The company’s announcement — which featured no commentary from either Ms Wynn as executive chair or Mr Anghie — said an independent board committee chaired by Nev Power and including former WA treasurer Ben Wyatt had determined the bid offered certainty of value for shareholders amid a cloudy outlook for the beleaguered group.

APM warned in April that 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.

The IBC said it was likely that APM’s share price would continue to be volatile, at least in the short-term, and potentially trade materially below the value of Madison Dearborn’s offer.

“APM’s employment services business continues to operate in an environment of extended low levels of unemployment and client flows, with increased support provided to achieve sustainable employment,” the statement said.

“Whilst APM remains confident that these factors will normalise over time and that APM’s other businesses will continue to grow, there is no certainty as to the time frame in which this will occur.”

APM, which is conducting a company-wide detailed review that aims to save $25 million from this quarter, has repeatedly warned investors that it continues to suffer operational pressures because of persistently low levels of unemployment, particularly in Australia and the UK.

After poor client flows over the past two months, it now expects its earnings and profit to be at the lower end of guidance and warned current conditions were likely to stretch into next financial year. It was also likely to increase interest expenses on previously refinanced drawndown bank facilities.

APM, which employs more than 15,000 people at 1600 sites in 11 countries, was first approached by private equity group CVC Asia Pacific in March with a $1.60-a-share bid. That was increased to $2-a-share but CVC walked away after four weeks of due diligence.

Madison Dearborn’s offer came just a few weeks later. It will require certain shareholders — including Ms Wynn and Mr Anghie to accept a deal for scrip instead of cash.

The deal will also be subject to approval by the Foreign Investment Review Board and a shareholder vote to be held in September.

Madison Dearborn is targeting completion of the deal by October.