Apollo Global Management has abandoned its proposed $2 billion takeover of Bodycote, a UK-based thermal processing services group. The decision, announced on a Friday, caused Bodycote's shares to drop by as much as 12%. This follows an all-cash bid submitted two weeks prior, offering 885 pence per share, which represented a nearly 27% premium over Bodycote's closing price before the bid was disclosed.
Under British takeover rules, Apollo is now restricted from making another approach for Bodycote for a period of six months, unless specific conditions are met. Despite the withdrawal, Apollo stated it continues to hold Bodycote and its management in high regard, but did not provide a reason for its decision to not make a firm offer. Bodycote, for its part, expressed confidence in its strategic direction and stated it was no longer in an offer period.
Analysts had previously suggested that Apollo's offer undervalued Bodycote. Berenberg analyst Andrew Simms commented that Apollo's interest at least validated the market's undervaluation of Bodycote's business quality and ongoing strategic transition. Analysts at Peel Hunt and Deutsche Bank also argued that the 885p proposal did not fully capture Bodycote's growth opportunities, especially in its aerospace and defense division and potential margin expansion from its Optimise and Perform initiatives.
