By Peter Frankl.
In case you are not up to date with the story so far, IPH Limited is Australia’s largest intellectual property firm. It is listed on the ASX. In terms of revenue, it is roughly double the size of its two rivals, Xenith IP Group Limited and QANTM Intellectual Property Limited, both of which are also listed on the ASX.
Xenith has been successful at growing its revenue by acquiring other IP firms but it has not been as successful in terms of profitability. As a result, its share price has performed poorly and the market value of the company has been affected accordingly.
Xenith’s next strategic move was to merge with ASX-listed competitor, QANTM. If the merger proceeds, it would mean that IPH Limited will have a competitor of around the same size as itself, as opposed to competing with two smaller rivals.
IPH’s actions appear to be aimed at thwarting the merger. IPH acquired almost 20% of the shares of Xenith and intended to vote against the QANTM merger. If that move was not shocking enough, today’s news is probably five-times more shocking. IPH has offered to acquire Xenith outright.
If IPH is successful in acquiring Xenith then QANTM will have to re-think its strategy in the marketplace, faced with such a dominant competitor, being the combined entity made up of Xenith and IPH.
IPH is offering $1.97 per Xenith share based on IPH’s closing price on 11 March 2019. This is comprised of $1.28 cash and the balance in IPH shares. At the time of writing, Xenith shares were trading at around $1.83 and closed the day before the takeover offer at $1.61.
The IPH and Xenith combination would comprise more than 1,440 people. All eyes are now on the Xenith Board to see which way they will recommend to go, towards QANTM or IPH?