Advanced Energy abandons pursuit of XP Power

18th Jun 2024 07:26

(Sharecast News) - Denver-based Advanced Energy Industries said on Tuesday that it does not plan to make a takeover offer for XP Power as it has not been able to access the due diligence necessary.

Advanced Energy has made three possible all-cash offers for XP Power, the last of which valued the group at £468m and all of which have been rejected.

"Advanced Energy has sought to engage with the XP Power board of directors, but the lack of any progress given relative expectations of value has prevented it from accessing due diligence necessary to make a firm offer," the company said on Tuesday.

"Based on publicly available information, Advanced Energy has not identified any additional elements that would justify improving the terms of its possible offer."

It said the last possible offer of 1,950p per share "captured the potential of future market recovery while factoring in near and intermediate term market and operational risks facing XP Power as a standalone company".

"Advanced Energy further believes that an offer would have been an excellent opportunity for XP Power's shareholders to realize an extraordinary premium, in cash, which would fully de-risk their investment."

It added that the decision not to make a firm offer for XP Power was consistent with its commitment "to financial discipline by targeting acquisitions that would generate a required return above its cost of capital".

In a very brief statement of its own, XP Power said it had had no contact from Advanced Energy since its indicative proposal was rejected on 13 May.

"The board confirms that its full year trading expectations remain unchanged," it said.

At 1210 BST, XP Power shares were down 15.4% at 1,319.99p.

Russ Mould, investment director at AJ Bell, said: "Whatever the real reason, it's clear this takeover deal is toast, hence why XP's shares have slumped on the news."

XP Power designs and manufactures power controllers, the essential hardware component in every piece of electrical equipment that converts power from the electricity grid into the right form for equipment to function.

Advanced Energy designs and manufactures highly engineered, precision power conversion, measurement and control solutions for mission-critical applications and processes.