Ann: Autodesk, Inc. Acquisition Proposal (Rejected), page-148

Three analysts opinions:

Shaw and Partners senior analyst Jules Cooper believes $45 per share is the minimum price Altium would, and should, consider.He said on the company’s forecasts out to 2025, there could easily be another 10 per cent to 20 per cent upside in the offer, and then it was important to factor in synergies between the companies and a recovery in market conditions.“It’s easy to look at it and say a bid north of $45 isn’t a stretch,” he said.“Going back a few years, that’s where the analyst price targets would have been anyway.“It has a significant opportunity to be a platform play that could transform the electronics industry, so I think $45 is the minimum price and from there it depends on the level of interest.”
Mr Cooper adjusted his price target from $43 to be in line with the Autodesk bid, but maintained his “buy” rating on the company.He said if Autodesk was serious about its vision of creating a unified design, engineering and manufacturing cloud platform, acquiring Altium would be the best way to do it.“We understand Altium to have a strong position in the PCB design market, with somewhere between 30 per cent and 40 per cent of all Western world designers using it,” he said.“To our knowledge ... Autodesk Eagle has 3 per cent to 6 per cent. If Autodesk really do believe in the strategy, they only really have the option to buy Altium, or go through the long road [of building up] Autodesk Eagle, only for it to take a decade and they’ll miss the opportunity.”Mr Cooper proposed that if Autodesk were aware of the opportunity, Altium’s biggest competitors Mentor (bought by Siemens for $US4.5 billion) and Cadence would be assessing the strategy too and could emerge as possible bidders.


Aberdeen Standard Investments’ (an investor in the stock) Australian equities investment director, Camille Simeon, believes Autodesk’s takeover proposal was designed to take advantage of its share price fall.“From our perspective the share price was oversold at that point in time,” she said.“There were a number of headwinds around the stock ... and the market rotation out of tech as well, so the bid was opportunistic.”


DNR Capital investment analyst Chris Tynan takes an opposing view.“The bid is affirmation they have the best in class mid-market product, making good strategic sense to a trade buyer. The bid multiple is very full however, and it’s surprising the board hasn’t engaged,” he said.“Management have done an exceptional job in growing their PCB market share, but it’s a smaller addressable market, still primarily desktop-based, and their percentage of recurring revenue is lower than most software peers.“It has outlined ambitious plans to be the centre of electronics parts and manufacturing ecosystem, but every software provider wants to be Apple and offer a platform where they are the linchpin. Realistically, this is incredibly difficult to achieve and there is little evidence to suggest they will, so it’s difficult for an acquirer to include this in their premium.”Mr Tynan said if another bid was to emerge, other possible interested parties would include electronic design automation providers such as Ansys and Synopsis.“You couldn’t rule out a competing trade buyer bid, but without the benefits of synergies, a private equity bidder would struggle to make money at this multiple.”