The Board of Xenith IP Group Limited (ASX: XIP) has carefully considered the IPH Limited Proposal which it received on 12 March 2019 (IPH Proposal) in order to determine whether it is a Superior Proposal in comparison with the proposed merger with QANTM Intellectual Property Limited. After careful assessment of the IPH proposal, the Board of Xenith has concluded that the IPH Proposal as presently framed is not a Superior Proposal.
Under the IPH proposal, IPH was aiming to acquire 100% of Xenith via a scheme of arrangement. While providing the proposal, IPH Managing Director (MD) & CEO Dr. Andrew Blattman had told that this proposal is providing a great opportunity to bring together two high-quality IP businesses. The offer price is representing a premium of 23.3% relative to the implied QIP Merger consideration of $1.598 and a 58.2% premium to the undisturbed Xenith share price on 26 November 2018.
IPH had told that it believes that this proposal is superior to the QANTM merger proposal, however, XIP’s Directors are thinking otherwise as they are not considering this proposal as a superior proposal.
XIP has provided various reasons for not considering this proposal as superior. As per the company’s announcement, one of the main reason for not considering IPH Proposal as superior is that it is fundamentally different than the proposed QANTM Merger. Under the merger with QANTM, the Xenith shareholders will hold 45 percent of the merged entity. Further, the shareholders will earn benefit from 45 percent of the earnings accretion which is expected to result from the merger with QANTM. On the other side, if the IPH Proposal is implemented, Xenith shareholders will be holding less than 5 percent of the merged entity.
Xenith also believes that the IPH Proposal is having a significantly higher execution risk than the QANTM merger proposal in terms of ACCC (Australian Competition and Consumer Commission) clearance.
As IPH Limited is already having a significantly higher market share than either of Xenith or QANTM, it is believed after merging with Xenith, the merged group will be by far the largest player in the market. On the other side, if the merger with QANTM is implemented, the market will be more evenly balanced between these two companies which are of almost the same size.
Now, let’s have a glance at the company’s stock performance and the return it has posted over the past few months. In the last six months, the share price of the company increased by 22.19% as on 18 March 2019. The stock last at a price of $1.820, down by 1.355% during the day’s trade with a market capitalization of ~$163.68 million as on 19 March 2019 (AEST 4:00 PM). It has 52 weeks high of $1.850 and 52 weeks low of $1.100 with an average volume of ~490,001.