The Xenith IP Group Ltd (ASX: XIP) share price is on watch this morning after IPH Limited (ASX: IPH) submitted a revised cash and scrip bid for the IP group at a value of $2.15 per Xenith share.
What did IPH announce to the market?
IPH believes its revised proposal provides compelling benefits for Xenith's shareholders and including $1.28 cash and 0.1261 IPH shares per Xenith share for a total of $2.15 per Xenith share based on IPH's 5 April 2019 closing price of $6.90 per share.
IPH is also providing a "Mix and Match" facility whereby Xenith shareholders may elect to receive 'Maximum Scrip Consideration' (i.e. 100% share-based) or 'Maximum Cash Consideration' (i.e. 100% cash) per Xenith share, subject to scale-back.
IPH is seeking to agree and sign the revised proposal with Xenith by 12 April 2019.
The move comes after months of back-and-forth with Xenith and its own merger target, QANTM Intellectual Property Ltd (ASX: QIP), with Xenith consistently rebuffing IPH's proposal.
The Xenith board has remained steadfast in its desire to merge with QANTM rather than accept IPH's proposal (which it deemed inferior) despite both deals recently getting the green light from the ACCC.
How did Xenith respond?
Xenith confirmed that after further engagement with IPH, it has received the updated proposal outlined above.
Management stated that the updated proposal constitutes a Compelling Proposal as defined in the Scheme Implementation Deed between Xenith and QANTM dated 26 November 2018, giving QANTM 3 business days (until 5pm Thursday) to match the terms of the IPH proposal.
The news is a big win for IPH, which has taken a 20% stake in Xenith in the hopes of gaining control of the company and preventing the QANTM merger. While its previous offers have been rejected as inferior to the QANTM deal, the new offer price and revised terms puts IPH in the box seat to acquire Xenith.
The big winners in this deal remain the Xenith shareholders, with the stock price currently trading at $1.92 per share, meaning the IPH offer represents a 12% premium to yesterday's closing price.
For investors who may have missed the boat on Xenith's capital gains, this top-rated growth stock is in the buy zone and could capitalise on a growing $22 billion industry.
