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

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.

The post APM share price placed on ice as $1.8 billion deal goes dud appeared first on The Motley Fool Australia.

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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.

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