APM shareholders back low-ball $1.3 billion privatisation offer

Dreary back-to-back shareholder meetings have sent APM back into private hands, capping a horror experiment as a listed company that saw most of its value shredded in less than three years. The employment and disability services group will quit trading on the ASX before the end of the month after investors on Wednesday voted overwhelmingly in favour of a low-ball $1.3 billion takeover offer from major shareholder Madison Dearborn. Having pocketed $515 million by selling part of its holding at $3.55 a share to mum and dad investors in APM’s initial public offer in November 2021, the US private equity giant is paying just $1.45 to take it private again. The results of two online meetings held on Wednesday to approve the offer showed overwhelming support, with backing from 99.9 per cent of shares cast and 92 per cent of voting shareholders. The largely procedural meetings were over in less than an hour. Madison Dearborn was not even represented and most of the talking was done by APM’s lead independent director, WA businessman Nev Power. The company deflected the only questions, which came from east coast shareholder activist Stephen Mayne. It also ignored Mr Mayne’s request for APM founder and chair Megan Wynne to address the meetings. The proxies in favour were dominated by the 34.7 per cent of APM held by Ms Wynne and husband Bruce Bellinge. APM listed in a blaze of optimism after raising a WA record $982m from new investors in what now seems an overpriced float that valued the group at $3b. The company, which is led by chief executive Mike Anghie, has only briefly flirted with its issue price - in mid-2022 - and its poor performance since the listing has fuelled investor caution about private equity-backed floats that seemingly don’t leave enough capital gains on the table for incoming investors . Ms Wynne founded APM in Perth 30 years ago, building a trusted business that partnered with governments to help unemployed people find jobs and return injured workers to the market. However, strong post-pandemic job markets undermined its business model, reducing its core profits, despite growing revenues from a string of acquisitions around the world. The result was a shock series of profit downgrades from late-2023 that burnt investor trust, embarrassed management and directors and savaged APM’s share price. Madison Dearborn, which holds about 29 per cent of APM, could pay as little as $155m in cash to take the Australian company under its wing. That is because most investors have opted to mainly take shares in the US group’s bidding vehicle in return for their APM stock in the hope of a payday when the business is inevitably sold again by Madison Dearborn. Ms Wynn and Mr Anghie, who owns 2.3 per cent of APM, will roll over all of their stock into the Madison Dearborn vehicle’s shares. They and the rest of the management team will remain with the group after the offer is completed. The Madison Dearborn bid price is a 5¢ improvement on the $1.40 a share it initially offered but well below a $2-a-share bid proposed by CVC and later pulled after due diligence. The offer was deemed fair and reasonable by APM’s independent bid expert, who valued the company at between $1.40 and $1.74 a share. Some $269m of writedowns on goodwill and customer contracts ahead of the privatisation pushed APM to a $219m loss for the year to June 30. Underlying net profit was 47 per cent lower at $95.1m, despite a 21 per cent jump in revenue to $2.3b. Its shares closed at $1.445.