Autodesk Proposes to Snap up Altium Limited; Shares up 3.8%

Autodesk Inc. (ADSK) has submitted a non-binding proposal for the acquisition of Altium Limited’s outstanding common shares for AUD$38.5.

Altium develops software important to electric engineers and printed circuit board designers in creating connected and intelligent products. The proposed acquisition will enhance Autodesk’s strategy of creating a unified design, manufacturing and engineering cloud platform that enables improved productivity and sustainability for clients. 

The proposed acquisition represents a 41.5% premium over the closing price of Altium on June 4, 2021, the day before the announcement of the proposal. Autodesk will finance the transaction through debt and cash. It will be subject to various conditions including unanimous support of Altium’s board, execution of the implantation scheme, and other customary conditions.  (See ADSK stock analysis in TipRanks)

Morgan Stanley analyst Keith Weiss raised ADSK’s price target from $266 to $269, implying a downside of 5.54% to current levels. This was after the company announced accelerated growth in cRPO bookings and billings in Q1, suggesting a return in momentum in the new business. Despite the positive indicators, Autodesk management did not raise FY22’s organic growth projections. That indicates conservatism, with the path towards recovery being short.

Weiss reiterated a “Hold” rating on ADKS stock indicating, “the main focus was an acceleration in billings and cRPO bookings (recurring revenue + sequential change in cRPO). Billings accelerated to 10% YoY, from -1% in 2H FY21, signaling building momentum in new businesses, particularly given the smaller base of renewals.”

Consensus among analysts is a Strong Buy based on 9 Buys and 2 Holds. The Autodesk average analyst price target of $338.60 implies 18.9% upside potential to current levels.

ADSK scores a “Perfect 10” on TipRanks’s Smart Score, indicating that the stock has strong potential to outperform market expectations.

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