Australian Competition and Consumer Commission (ACCC) has announced that it will not oppose the IPH Limited’s (ASX: IPH) proposal to combine IPH with Xenith IP Group Limited. Although this resolves a major uncertainty about that proposal, Xenith has raised various concerns with IPH about its proposal, only one of which was the risk of ACCC objecting to IPH's proposed acquisition of Xenith.
The proposal was made on 12 March 2019, under which Xenith shareholders are supposed to receive $1.28 cash and 0.1056 IPH shares for each Xenith share that they hold. Due to the significant premium to the recent trading price of XIP shares and significant certainty of value, this proposal is having a compelling value.
A leading intellectual property (IP) business, QANTM Intellectual Property Ltd had also proposed a merger between QANTM and Xenith which also has compelling financial, strategic and operational benefits, however, since the announcement of the IPH Offer, the value of the proposed merger between Xenith and QANTM Intellectual Property Limited has materially decreased. At the same time the value of the IPH Offer has increased in value to $2.01.
The decision of ACCC of not opposing the IPH Offer has removed the key regulatory condition to implementing the combination of IPH and Xenith and in IPH’s view removal of this condition confirms that the IPH Offer is a Superior Proposal to the QANTM Merger. IPH believes that the merger of IPH and Xenith is consistent with Xenith’s transformational goals.
As per the IPH’s announcement, since listing it has successfully integrated seven acquisitions into the business and has a high rate of retention of ex-vendor Principals making it a better choice for the merger.
IPH also advised that ISS, an independent proxy advisor, has recommended that Xenith shareholders vote against the QANTM Merger as Xenith shareholders may consider that the IPH Offer is objectively superior to the QANTM Merger, and that CGI Glass Lewis has recommended abstaining on the vote.
IPH has also confirmed that it will be lodging its vote by proxy notice against the QANTM Merger for its 19.9% shareholding in Xenith and advised all Xenith shareholders to do the same.
Now, let’s have a glance at IPH Limited’s stock performance and the return it has posted in the last few months. The stock is trading at a price of $7.045, up by 1.659% during the day’s trade with a market capitalisation of ~$1.37 billion as on 28 March 2019 (AEST 2:30 PM). The counter opened the day at $6.930 and reached the day’s high of $7.060 and touched a day’s low of $6.760 with a daily volume of ~420,722. The stock has provided a year till date return of 27.86% & also posted returns of 15.89%, 29.78% & 14.55% over the past six months, three & one-month period respectively. It had a 52-week high price of $7.060 and touched 52 weeks low of $3.330, with an average volume of ~830,591.
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