New XP Power bid may be difficult to reject - Jefferies

Investing.com - Advanced Energy Industries (NASDAQ:AEIS) announced earlier Tuesday that it has increased its bid for London-listed XP (NASDAQ:XP) Power (LON:XPP), and this all-cash offer could be hard to turn down, according to Jefferies.

The latest offer, at a price of £19.50 per share, represents a 68% premium to XP Power’s closing share price of £11.64 on Monday and an 82% premium on its 30-trading day average price. 

XP Power’s board had rejected previous bids of £17.00 per share and £18.50 per share in the fourth quarter of last year, and said Tuesday that it had “unanimously concluded” that the proposal “fundamentally” undervalued the company and its prospects.

“This is a hostile bid, which fascinates us,” said analysts at Jefferies, in a note, “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.”

The board’s rejection raises the question clearly as to what offer would be acceptable, the U.S. bank said, 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 the fourth quarter of 2023 after its profit warning.

Advanced Energy said that the acquisition would be funded from more than US$1 billion of cash on its balance sheet, and would be consistent with its strategy of providing broader and deeper product sets to its customers in Semiconductor, Medical and Industrial end markets. 

At 09:05 ET (13:05 GMT), XP Power stock traded 45% higher at £16.90 in London, while Advanced Energy closed Monday at $107.88.