Altium shares tumble amid speculation that suitor Autodesk has walked away

Altium has rejected offers from Autodesk.

Shares in software company Altium plunged by more than 10 per cent before trade was halted on Monday, as buyout suitor Autodesk confirmed it had moved on from the target.

DataRoom reported on Monday that Altium received a higher offer for the business from Autodesk, but it was rejected.

This was after Autodesk initially put forward a bid of $38.50 per share that was rejected.

Sources told The Australian’s DataRoom that Autodesk has come back to the board offering a price thought to be between $1 and $2 higher, but it was rejected.

It is understood the offer was informal and of a verbal nature rather than in writing.

Altium said in a statement on Monday that it had not received any further offer from Autodesk, other than the $38.50 per share bid that was rejected and was disclosed to the market.

Autodesk then confirmed in a statement on Monday that acquisition talks with Altium had ceased.

In a research note on Monday, Royal Bank of Canada Capital Markets said it did not believe other suitors would emerge for the target or that Autodesk would return with an offer acceptable to Altium’s board.

It said without the possibility of mergers and acquisitions, the company’s share price would likely fall to about $27.

The $38.50 per share priced Altium’s valuation at about 50 times its earnings before interest, tax, depreciation and amortisation for the next 12 months including debt, compared to about 30 times over the past five years on average.

“The possibility of competing bids from firms including Cadence, Dassault and PTC may emerge, but in our view, is likely to encounter similar issues to Autodesk versus Altium’s value expectations,” the analysts said.

“We believe the share price is now likely to trade more on fundamentals than mergers and acquisitions.”

Shares on Friday closed at $36.55.

On Monday, shares closed down $1.38 or 3.8 per cent to $35.17 after earlier dipping to about $32.73.

Altium is involved in the development and sales of computer software for the design of electronic products.

Autodesk is a US multinational software corporation that caters for the architecture, engineering, construction, manufacturing, media, education, and entertainment industries.

Altium chief executive Aram Mirkazemi, based in San Diego, and Australia-based chairman Sam Weiss have been in friendly talks with Autodesk for several months.

Before the $38.50 per share offer was announced, the shares were trading at around $27.

The $38.50 per share proposal was a premium of 41 per cent to the last traded share price.

While some market observers believe Altium should take the offer after suffering from an earnings downgrade this year, others say they believe the business is worth well over $40 per share.

They attribute some of the earnings downgrade to moving to fixed term products from perpetual software products which initially creates a hit to its revenue.