IPH launches rival bid for Qantm

IPH has launched a $250m bid for its rival Qantm.

IPH has launched a $250m bid for its rival Qantm Intellectual Property after private equity firm Adamantem is yet to firm up its proposal following due diligence.

IPH will offer 0.291 shares per Qantm share, valuing the business at $1.79 per share or $250m. Including the 11c per share dividend, it is $1.90.

Qantm shares closed at $1.77 after closing at $1.68 earlier and IPH shares closed at $6.04 after closing at $6.15 on Tuesday.

Adamantem is offering $254m for the business or $1.817 cash, but is yet to firm up its offer.

Both parties have agreed on the financial terms, but it requires Qantm backers to roll into the offer, which may be what continues to hold up the negotiations.

One third of Qantm is owned by its principals.

Macquarie Capital is advising IPH and Moelis is advising Qantm.

Qantm is yet to engage with IPH or give any recommendation of the offer.

But among matters under consideration will be evaluating a cash versus share deal and whether the transaction would get approval from the Australian Competition and Consumer Commission.

While presenting at the Macquarie Australia Conference in Sydney on Wednesday, IPH chief executive Andrew Blattman said the company’s advice was that there could be a pathway for deal approval from the competition watchdog.

Other suitors had been around the hoop before Adamantem bid but it trumped the earlier proposals with its price.

Qantm’s appeal was its clients, most of which were domestic, and the opportunity to leverage them into new markets including Canada, while its Sortify.tm business added to its technology.

The deal would be earnings per share neutral, and while there would be some synergies over time, it was not the prime motivation for the transaction.

Adamantem won the right to gain an exclusive look at the company’s books on March 14 when it made its $1.817 a share offer.

Other parties that were keen to buy Qantm include UK-based intellectual property firm Rouse International Holdings, which has already carried out some exclusive due diligence on the business after putting forward a scrip offer at an undisclosed price.

Qantm and IPH have a bitter history.

IPH made a $240m bid for Qantm several years ago, when Qantm had plans to merge with smaller rival Xenith.

After Qantm rejected the offer, IPH merged with Xenith instead, leaving Qantm out manoeuvred.

While the ACCC approved that deal, it warned that further consolidation may be challenging for IPH given its market share.