Liquidity Risks Loom as Apiam Delists in Adamantem-Controlled Buyout

Background and Transaction Overview

Apiam Animal Health Limited (ASX:AHX), a leading Australian rural veterinary business with over 80 clinic sites nationwide, has entered a binding scheme implementation deed with Pepper Bidco Pty Ltd and Pepper Holdco Limited, entities controlled by Adamantem Capital Fund II. The proposed transaction involves BidCo acquiring 100% of Apiam shares via a scheme of arrangement, subject to shareholder and court approval.

The Scheme Booklet, which includes detailed information on the transaction, the Independent Expert’s Report, and the Notice of Scheme Meeting, has been registered with ASIC and dispatched to shareholders. The Scheme Meeting is scheduled for 3 February 2026, where shareholders will vote on the proposed acquisition.

Scheme Consideration and Options for Shareholders

Under the Scheme, shareholders will receive $0.87 cash per Apiam share, adjusted for any special dividend declared prior to implementation. Alternatively, eligible shareholders may elect to receive a combination of cash and scrip consideration in HoldCo, an unlisted Australian public company holding BidCo. The scrip consideration options include 100% scrip, 25% cash with 75% scrip, or 50% cash with 50% scrip. The scrip shares will be subject to scaleback arrangements to ensure total issuance does not exceed 24% of HoldCo’s capital.

The Apiam Board may declare a fully franked special dividend of up to $0.10 per share before the Scheme’s implementation, potentially providing additional franking credits to eligible shareholders. The final decision on the special dividend will be announced prior to the Scheme Meeting.

Independent Expert’s Assessment and Board Recommendation

Kroll Australia Pty Ltd, the Independent Expert appointed by the Apiam Independent Board Committee (IBC), has concluded that the all-cash consideration of $0.87 per share is fair and reasonable and in the best interest of shareholders, absent a superior proposal. The expert’s valuation range for Apiam shares on a controlling interest basis is $0.77 to $0.93, placing the cash offer comfortably within this range.

The Apiam IBC, along with directors Bruce Dixon and Vita Pepe, unanimously recommend shareholders vote in favor of the Scheme, subject to the Independent Expert maintaining its positive conclusion and no superior proposal emerging. However, the IBC does not provide a recommendation on the scrip or mixed consideration options, noting these carry different risk profiles.

Post-Transaction Structure and Risks

Upon completion, Apiam will be delisted from the ASX and become a wholly owned subsidiary of BidCo. HoldCo shareholders, comprising those who elect scrip consideration, will hold a minority stake (up to 24%) in an unlisted entity controlled by Adamantem. This structure introduces liquidity constraints and reduced shareholder protections compared to the current ASX-listed status.

Shareholders opting for scrip consideration should carefully consider risks including limited marketability, minority voting rights, potential dilution, and the absence of ASX continuous disclosure and takeover protections. The Independent Expert highlights that the realisable value of HoldCo shares may be subject to significant minority and marketability discounts.

Funding and Next Steps

The acquisition is funded through a combination of equity commitments from Adamantem’s investors and a senior debt facility totaling approximately A$181 million. Transaction costs are estimated at $21.7 million, which will be borne by HoldCo and reflected in the value of scrip consideration.

Shareholders are encouraged to review the Scheme Booklet in full, consider the tax implications, and seek professional advice if uncertain. The outcome of the shareholder vote and subsequent court approval will determine the future ownership and strategic direction of Apiam.