Intellectual property firm IPH has upset Qantm’s merger plans with Xenith IP Group by launching a $192 million offer to buy the company yesterday.
The offer has left the Xenith board with a decision of whether to engage with IPH or press on with its proposed Qantm plan, as the battle for dominance among the intellectual property companies heats up.
It is understood that Xenith is yet to engage with IPH.
The binding IPH offer by way of a scheme of arrangement involves cash and scrip, where Xenith shareholders will receive $1.28 cash and 0.1056 IPH shares.
Last night, its bid valued Xenith at $1.99 a share, equating to $192m on an enterprise value or $177m on a market value.
The Qantm proposal as of last night was worth $1.84 a share, or $162m, but $2.03 a share based on the Monday close.
Qantm has maintained that an IPH and Xenith combination would spark scrutiny from the Australian Competition & Consumer Commission, but the thinking among some is that the competition watchdog would apply scrutiny to a merger involving any of the major three players.
Qantm is proposing to offer Xenith shareholders 1.22 Qantm shares for every Xenith share.
Much of what deal Xenith’s board and shareholder opts to support could come down to whether it believes it would be better off strategically combining with a larger player.
IPH has a $1.29 billion market value, whereas Qantm is worth $220m.
“We believe our proposal to Xenith provides a great opportunity to bring together two high-quality IP businesses and to draw on the strengths, skills and advantages of each member firm to realise opportunities for our people, our clients and our shareholders,” IPH managing director Andrew Blattman said.
The bid is part of a battle unfolding among Australia’s listed intellectual property firms.
IPH has amassed a 19.9 per cent stake in Xenith, and IPH earlier made a play for Qantm, but was rebuffed by the board.
Qantm last year agreed to a merger with Xenith and dismissed a higher takeover bid from IPH valuing the company at $240m.
The offer by IPH of $1.80 a share was made on November 20, but Qantm said the proposal was not in the best interests of shareholders because it was highly conditional, required further due diligence and was opportunistic, based on the company’s depressed earnings.
Xenith shares yesterday closed at $1.83, up 14 per cent, while IPH was at $6.71, up 18c, and Qantm at $1.51, down 15c.
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