21st May 2024 09:41
(Alliance News) - XP Power Ltd shares jumped after Nasdaq-listed Advanced Energy Industries Inc disclosed Tuesday that it has made a series of takeover approaches for the power control systems maker.
XP Power shares were up 48% to 1,720.00 pence in London on Tuesday morning.
Advanced Energy Industries is a maker of precision power conversion, measurement, and control solutions. AEI said it has made three all-cash takeover approaches, each slightly higher than the last. The first offer in October valued XP Power's equity at GBP339 million, a second roughly two weeks later in November value it at GBP369 million and the most recent, earlier this month, valued it at GBP468 million. Including debt, the latest proposal has a total value of GBP571 million.
At GBP19.50 per share, the latest proposal is a 68% premium to XP Power's closing price of GBP11.64 on Monday.
AEI noted the first two proposals came before XP Power raised GBP43.9 million in a placing.
AEI hit out at the "lack of engagement" from XP Power.
AEI said: "Each of these proposals has been at a significant premium to the share price at the time of each respective proposal, but the board of XP Power unanimously rejected each of these proposals. Given the lack of engagement from the board of XP Power, Advanced Energy believes that XP Power's shareholders should be made aware of the latest proposal, which represents a compelling and highly attractive opportunity."
The firm said its offer gives XP Power shareholders a "unique opportunity" to realise their investment at a "highly attractive valuation".
"This valuation may not be achieved should XP Power remain as a standalone company," AEI cautioned.
It also said XP Power trades at "low levels of liquidity", making it even more difficult for shareholders looking to sell their stock.
Jefferies said the 1,950p offer might be too chunky "to turn down".
"This is a hostile bid, which fascinates us, and the all cash nature of the offer would provide investors with a clean exit, and would reflect an acquisition multiple that, in our view, bakes in a meaningful recovery in the group's profitability over the mid-term," Jefferies analysts said.
"This is however very much a hostile situation, with XP Power's board having unanimously rejected this offer, and two previous ones in 4Q last year. It raises the question clearly as to what offer would be acceptable, as well as whether there are any other suitors that could be forthcoming, as there were when the group received a 'small number' of unsolicited offers back in 4Q23 after its profit warning."
By Eric Cunha, Alliance News news editor
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