IPH poised to disrupt merger plans after purchasing $33m stake in takeover target Xenith IP

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By Lauren Barrett - 

IPH intends to block the Xenith IP/Qantm merger, however Xenith IP said it would continue to satisfy conditions of the scheme of arrangement regardless.


Intellectual property law firm IPH Limited (ASX: IPH) has purchased a 19.9% stake in Xenith IP Group (ASX: XIP) and has indicated it plans to vote against the company’s friendly merger with Qantm Intellectual Property (ASX: QIP).

IPH informed shareholders today of the purchase of the equity interest in smaller intellectual property law firm Xenith, which now makes the rival Xenith’s biggest shareholder.

In explaining its decision for the share purchase, IPH said it had entered into the transaction to participate in “industry consolidation, consistent with its strategy to pursue acquisitions in the domestic market which are compelling from a strategic and financial sense.”

IPH forked out about $33 million for the purchase of its majority holding in Xenith. The company paid $1.85 per share for the stake, which was a premium on Xenith’s $1.405 closing price yesterday.

IPH seeks to thwart Xenith merger

The move by IPH to purchase a majority holding in Xenith comes in the wake of Qantm Intellectual Property and Xenith IP announcing a $285 million merger.

The proposed merger with Melbourne-based Qantm was spruiked as a deal which would create an “industry leading” group of independent IP businesses servicing markets in Australia, New Zealand and Asia.

However, IPH has expressed dissatisfaction with the merger plans, initially earmarked to be completed in April 2019.

IPH said it would not vote in favour of it, instead suggesting an alternative transaction involving a strategic combination of one of the businesses with IPH.

“Since listing on the ASX in 2014, IPH has consistently demonstrated its ability to make considered, strategic acquisitions and successfully manage these businesses as part of the IPH group,” IPH chief executive officer Dr Andrew Blattman said.

“Any potential transaction would continue to demonstrate IPH’s financial discipline and a focus on undertaking transactions which benefit its shareholders, clients and employees.”

As an ASX 200 company, IPH became the first IP services group to list on the Australian Securities Exchange following its successful initial public offering in 2015. Today, the company has a market capitalisation of approximately $1 billion.

In response to IPH’s share purchase, Xenith said it would continue to proceed with the proposed merger of equals with Qantm.

In afternoon trade, IPH shares were trading 2.5% higher to $6.10, Xenith shares surged 18.1% to $1.66 and Qantm shares were up 7.82% to $1.585.