Autodesk is said to be walking away from its $5bn target Altium after the computer software company rejected a sweetened offer by the US multinational.
Altium, advised by Goldman Sachs, told the market at the beginning of June that it had rejected a buyout proposal from Autodesk.
The offer at that time was $38.50 per share.
But sources say that since then Autodesk has come back to the board offering a higher price.
But is understood that Altium has taken the view that the higher price – thought to be $1 or $2 per share more – is not enough to convince the board to allow Autodesk to carry out due diligence to determine if it will move forward on its buyout proposal.
Hedge funds appear to have taken the view on Friday that the chances of a deal were fading, with shares closing at $36.55, down 2.8 per cent.
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.
Altium is involved in the development and sales of computer software for the design of electronic products.
Despite the offer being 20 times the group’s forecast revenue, some investors have suggested that the company is worth more than $40 per share, given that it was highly strategic for a major global mechanical group to enter the electronic product design market.
Autodesk, advised by Morgan Stanley, makes software products and services for the architecture, engineering, construction, manufacturing, media, education and entertainment industries and has a $US62bn market value.
Earlier, it appeared the market had been pricing the stock as though the Autodesk offer would be increased by $1-$2, or a rival proposal might emerge, with a bet on a future earnings uplift unlikely to be a factor in the share price increase.
Altium downgraded its earnings guidance at its investor day on June 18.
Then, the company told the market that it expected its 2021 financial year revenue to be at the low end of its guidance of $US190m to $US195m and its profit margin to also be at the low end, between 37 and 39 per cent on an underlying basis.
At the time, the company said that momentum had returned in the second half of the financial year with double-digit growth, but that the business had suffered from the impact of Covid-19 and its pivot to cloud-based products.
Investors have earlier wondered whether rival offers might emerge form companies such as Samsung, Ansys or PTC.
The interest from Autodesk comes amid a major merger and acquisition boom in Australia as companies are keen to put funds to work at a time of low interest rates.
Global software provider Hansen Technologies also announced in June it had recommended a $1.3bn buyout proposal from BGH Capital, advised by Morgan Stanley.
Electricity asset owner Spark Infrastructure confirmed on Friday it had received a $4.9bn buyout proposal from Ontario Teachers’ Pension Plan and Kohlberg Kravis Roberts, advised by Barrenjoey Capital Partners and UBS.
The $2.80 per share Spark bid was rejected, but a management presentation was held by Spark for the consortium on Friday in the hope that it may sweeten the deal.
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