Qantm Intellectual Property Group and Xenith IP Group Limited will merge. Rival, IPH Limited also approached QANTM but was rejected.
QANTM and Xenith will merge through an all-scrip scheme of arrangement whereby Xenith shareholders will receive 1.22 QANTM shares for each Xenith share they hold.
The pro forma market capitalisation of the merged group will be approximately $285.2 million. On completion of the Transaction, QANTM and Xenith shareholders will own 55% and 45% respectively of the Merged Group.
The merger creates with 349 professionals in Australia, New Zealand and Asia.
The Merged Group has a FY18 pro forma EBITDA of $45.2 million, with the merger expected to achieve cost synergies of $7 million per annum to be fully realised at the end of year three, generating earnings per share accretion for both Xenith and QANTM shareholders.
IPH’s EBITDA for FY18 was $74 million highlighting its superior profit generating ability. IPH’s market capitalisation is currently over $1 billion, more than three times the pro forma market capitalisation of its merged rivals.
The Transaction implies a value of $1.598 per Xenith share, based on the most recent closing price of QANTM shares ($1.310 per share as at 26 November 2018). This value represents premia of approximately 28.4% to the most recent closing price of Xenith shares ($1.245 per share), and approximately 27.0% to the 1-month volume weighted average price (VWAP) of Xenith shares ($1.258 per share).’