Altium Limited (ASX: ALU) is one of the top technology firms on the ASX. They are a software company that provides electronic design software. These design tools are required and used all over the world by any company that manufactures printed circuit boards (PCB), and these PCBs are used in everything electronic. Given that the USA and China are the largest markets – both in terms of manufacturing and consumption of PCBs and electronic devices, Altium’s revenues are very dependent on them.
ALU shares were flying high back in October 2020, even breaching the $40 a share mark. Since then however, there has been weakness as selling pressure has mounted. There were three reasons for the significant dip in ALU share price:
- Rising Bond Yields in February that triggered a shift from growth to value stocks
- Altium offering discounts and extended payment terms while operating under the impacts of Covid19
- A rather weak half-year performance and a downgrade given the discounts and a planned shift in Altium’s business model towards a SaaS offering.
The concoction of the above 3 elements is rather dangerous and it resulted in the ALU share price sinking to as low as $23 a share. The plunge, however, did open up an opportunity to several investors willing to take on the risk and buy ALU shares on the cheap. After all, it is a blue chip, an industry leader, and one of the largest and best tech stocks on the ASX that also pays a tiny bit of dividend.
Altium shares closed today at $37.83 a share, surging 39.03%. The firm announced that they had received a formal, non binding, indicative, and unsolicited takeover offer from Autodesk. For reference, Autodesk (NASDAQ: ADSK) is one of the biggest American software companies with a market cap of over $62 billion.
The takeover offer for 100% of Altium was for $38.5 a share – a 41% premium over ALU shares closing price as of yesterday. The bid, however, has been rejected by Altium’s board as the company revealed that they find the offer undervalued.
Altium is now known to be working with Goldman Sachs as their financial advisor to come up with an appropriate valuation and engage with interested parties. The announcement by Altium reveals that while the current bid by Autodesk may be rejected, Altium is quite open to the idea of an acquisition.
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