Madison Dearborn to sweeten takeover bid for APM

APM is set to announce on Monday that the US private equity firm Madison Dearborn is to increase its offer. Picture: NCA NewsWire/Jeremy Piper

APM is set to announce that its major shareholder Madison Dearborn has sweetened its offer for APM that currently values the business at $1.3bn.

The Megan Wynne-founded and chaired APM on Friday entered a trading halt up until Tuesday, telling the market that the halt was related to an update on the non-binding acquisition proposal received from Madison Dearborn Partners, as announced to the Australian Securities Exchange on April 8.

DataRoom understands that APM is set to announce on Monday that the US private equity firm, which already owns 29 per cent of the company, is to increase its offer slightly after some in the market had been betting a bump in price.

There had been expectations among hopeful shareholders last week for a deal proceeding and that the lift could be somewhere between 1c and 10c a share.

Madison Dearborn has been carrying out due diligence on the target since that time after it put forward a proposal to privatise the business at $1.40 per share.

Before that, APM rejected a bid at $1.60 per share from private equity firm CVC, which later won due diligence with a higher $2 offer.

However, after due diligence, it walked away, and when it announced the new offer from Madison Dearborn it also issued a profit downgrade, where earnings were somewhere between 5 and 10 per cent less than anticipated.

APM is wrestling with the tight allied health labour market, higher wages and rent and abnormally prolonged low levels of unemployment.

Ms Wynne owns 34 per cent of the UBS-advised APM and a buyout deal would require her rolling into the transaction with Madison Dearborn, advised by Goldman Sachs.

When announced, APM’s independent board described the offer that values the company at $1.3bn as “disappointing”, but did not reject it outright.

Madison Dearborn purchased APM from Quadrant Private Equity for $1.5bn in 2020 and listed it the following year as a business worth $3.25bn.

However, APM’s share price has since fallen considerably, with its market value now at $1.14bn and share price at $1.25. It was trading before CVC’s bid at 83c a share.

The Perth-based company is one of the nation’s largest human services providers, delivering programs for the government’s National Disability Services and National Disability Insurance Scheme.

Waste Management Services Group

Elsewhere, shortly to come to market in the industrial space is Livingbridge’s Waste Services Group through UBS.

Established in 2016 and run by Matt Tamplin, Waste Services Group has about 6000 customers across managed services and collections.

It is believed that Livingbridge is talking about annual earnings before interest, tax, depreciation and amortisation of between $50m and $100m for the business, which industry experts believe would likely achieve a sales multiple of about six times.

The understanding is that Livingbridge is looking for a sale multiple between 10 and 12 times.