The Altium Limited (ASX: ALU) share price is dropping today with Autodesk walking away from the takeover approach.
What’s going on with the Altium share price?
Altium shares are down another 3% at the time of writing. The electronic PCB software business has been the target of takeover talks for a number of weeks. However, the bidder has reportedly ended the discussions.
According to reporting by the Australian Financial Review, Autodesk has terminated those talks, saying that it was unable to reach an agreement.
The Autodesk CEO Andrew Anagnost said:
“Autodesk has a long track record of disciplined strategic acquisitions. While we did verbally improve our initial proposal, we were unable to agree on the basis to advance discussions. We respect the leadership team at Altium and wish them the best with their business.”
Autodesk had previously made a bid of $38.50 per share for Altium and then reportedly made a verbal bid of $40 per share. But that wasn’t enough. So here we are. The Altium share price is drifting back towards the pre-bid price.
Just before the bid came in, the Altium share price was at $27.21. So it’s still substantially higher than before.
What next?
For Altium, it’s good to see that such a large player in the space was willing to pay a high price for the technology company.
But it’s interesting that management have a much higher opinion of Altium’s outlook than around $40 per share.
It will now have to work harder than ever to justify that confidence. At the moment, the company is suffering impacts that may or may not be solely related to COVID-19. Time will tell if Altium has permanently lost its momentum or whether it can regain the growth trajectory it was seeing a couple of years ago.
At a share price of around $33, I’m personally not excited to buy (more) shares. I think that it does have good long-term potential, but it’s hard to know what price is good value when it’s at a fairly high price/earnings ratio already and growth is slow.
I have my eyes on other ASX growth shares for now.
