Xenith IP Group Ltd (ASX: XIP) share price is currently 20% higher due to an ASX announcement by IPH Ltd (ASX: IPH).
Both of these businesses are legal firms that, as the names might suggest, work as intellectual property companies.
Why has the Xenith share price risen?
Earlier this morning IPH announced it had acquired around 19.9% of Xenith’s shares. IPH said it had done this to “participate in industry consolidation”, where it aims to make domestic acquisitions.
IPH purchased the shares from institutional investors at a price of $1.85 per share, for a total cost of $33 million, which has been funded from debt facilities. This compared to the current share price of $1.70 and yesterday’s share price of $1.40.
However, Xenith is currently going through its own merger with QANTM Intellectual Property Ltd (ASX: QIP), which itself was a takeover target of IPH a few months ago.
IPH doesn’t want the Xenith-QANTM merger to go ahead and wants to acquire one of them instead, although a deal would require ACCC approval.
IPH CEO Andrew Blattman said: “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.”
Xenith said IPH is yet to communicate its intentions with Xenith. The Board of Xenith intends to proceed to merge with QANTM and believes in the potential benefits of the merger.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).