APM Human Services International rejects $1.5b takeover proposal from CVC Asia Pacific

The directors of Australian company APM Human Services International (ASX: APM) have rejected a $1.5 billion takeover proposal from private equity firm CVC Asia Pacific.

The struggling employment services provider confirmed it had received a conditional and non-binding indicative proposal this week from CVC which would see it acquire all of APM’s shares by way of a scheme of arrangement.

It follows a period of engagement between the two companies including the provision of information and due diligence under the terms of a non-disclosure agreement.

Under the terms of CVC’s proposal, APM shareholders would receive consideration of $1.60 cash per share less any dividends paid.

They may opt to receive all or part of the consideration as unlisted scrip in CVC’s acquisition entity.

The consideration represents a 93% premium to APM’s last closing price and values the company at approximately $1.5 billion.

Proposal rejection

This morning, APM announced that its board and independent directors had unanimously agreed to reject the proposal on the basis that it “does not sufficiently reflect the company’s fundamental value” and the global potential of its market-leading platform.

Executive chair Megan Wynne said the board was confident in the outlook for APM, despite the company’s struggles in a challenging environment at a historic low point of the unemployment cycle.

“[We] remain focused on continuing to deliver the highest-quality services globally for our clients and stakeholders and executing on our strategy,” she said.

“The board and I have full confidence in APM’s management team to deliver long-term value to our shareholders [and] I am confident in the outlook for the company.”

Hard times

APM has hit on some hard times in its two-year stint on the boards of the Australian Securities Exchange.

It is believed to be battling declining client flows and case volumes, at a time when unemployment rates remain low.

The company’s share price has crashed from $3.55 to a low of $0.68 in January, leaving it vulnerable to private equity interest.

It recently reported a preliminary underlying result for the six months ending 31 December of $55 million, representing a drop of 36% on the previous corresponding period.

This morning’s takeover rejection saw APM’s share price soar to as high as $1.44.