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Xenith IP share price surges 15% higher after IPH outbids QANTM IP

The IPH Ltd (ASX: IPH) share price and the Xenith IP Group Ltd (ASX: XIP) share price have been strong performers on Tuesday.

At the time of writing the IPH share price is 2.5% higher to $6.69 and the Xenith IP share price has stormed 15% higher to $1.85.

One share that hasn’t followed suit is the QANTM Intellectual Property Ltd (ASX: QIP) share price which is down 3.5% to $1.60 this morning.

What happened?

This morning IPH announced that it has submitted a proposal to acquire Xenith IP for a combination of cash and shares. Under the proposal Xenith IP shareholders will receive $1.28 cash and 0.1056 IPH shares for every Xenith share, representing a total value of $1.97 per Xenith share.

This has cast doubts over the proposed Xenith IP-QANTM IP merger and appears to have put IPH in pole position.

According to the release, IPH believes its proposal provides compelling benefits for Xenith’s shareholders, its leading IP attorneys, and other stakeholders. It also notes that it is 23.3% greater than the implied QANTM merger consideration.

The company has reiterated that it intends to vote against the merger of Xenith and QANTM at the upcoming scheme meeting, should it still go ahead.

Managing director and CEO, Dr Andrew Blattman, believes the combination of the two companies would be a big positive for both sets of shareholders.

He said: “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.”

What now?

I think the combination of IPH and Xenith IP would create a force in the intellectual property services industry.

This could make it worth considering an investment in IPH if the acquisition goes ahead. Though, I’d suggest investors keep their powder dry until Xenith IP and QANTM IP have responded to this development.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended IPH Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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