Advanced Energy Industries, Inc. (Nasdaq: AEIS), a global leader
in highly engineered, precision power conversion, measurement, and
control solutions, today announced a possible offer of £19.50
per share in cash to acquire the entire issued and to be issued
shares of XP Power Limited (LSE: XPP, “XP Power”), after submitting
three, all-cash, proposals to the Board of XP Power as set out
below:
- On October 24, 2023, at £17.00 per share in cash, valuing XP
Power's equity at £339m;
- On November 5, 2023, at £18.50 per share in cash, valuing XP
Power's equity at £369m; and
- On May 7, 2024, at £19.50 per share in cash, valuing XP Power's
equity at £468m (the “Latest Proposal”) and reflecting the
increased number of shares following XP Power’s November 6, 2023
equity raise executed at £11.50 per share (the “Fundraising”).
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 particularly in light of the
November 6, 2023 Fundraising and February 16, 2024 Trading Update.
The possible acquisition of XP Power is consistent with Advanced
Energy’s growth strategy, but the company will remain price
disciplined when considering any potential acquisitions, including
the potential acquisition of XP Power.
The Latest Proposal at the price of £19.50 per share in cash
represents:
- a 68% premium to XP Power’s closing share price of £11.64 as of
May 20, 2024 (being the last business day prior to this
announcement);
- a 82% premium to XP Power’s 30-trading day volume weighted
average price of £10.74 as of May 20, 2024;
- a 70% premium to £11.50 per share raised on the November 6,
2023 Fundraising;
- a 15% increase to the October 24, 2023 proposal of £17.00 per
share, representing a 93% premium to XP Power’s closing share price
on the trading day before the offer, and a 38% or approximately
£130 million increase to XP Power’s implied equity value reflecting
the increased number of shares following the Fundraising;
- a 5% increase to the November 5, 2023 proposal of £18.50 per
share, representing a 80% premium to XP Power’s closing share price
on the trading day before the offer, and a 27% or approximately
£100 million increase to XP Power’s implied equity value reflecting
the increased number of shares following the Fundraising; and
- a 76% premium to XP Power’s closing share price on the trading
day before the May 7, 2024 proposal of £19.50 per share was
submitted to the Board of XP Power.
The total proposed consideration of the Latest Proposal is £571
million, based on the fully-diluted share count of 24.0 million
ordinary shares, reported net debt of £103.4 million at the end of
March 31, 2024, and no further dividends to be declared or paid
after this announcement. Advanced Energy intends to fund the
acquisition with cash available on its balance sheet.
Advanced Energy believes that the Latest Proposal provides a
unique opportunity for XP Power's shareholders to realize, on
completion of the possible offer, the value of their shareholdings
in cash at a highly attractive valuation. This valuation may not be
achieved should XP Power remain as a standalone company.
Furthermore, XP Power shares trade at low levels of liquidity which
continue to prevent shareholders looking for an exit in full to
monetize their position. Advanced Energy further believes that the
Latest Proposal addresses many of the current challenges facing XP
Power by:
- Providing additional scale and resources necessary to compete
more effectively in the precision power industry;
- Reducing cyclicality as part of a larger company with a broader
global market presence;
- Enhancing XP Power's position as a strategic supplier with a
more comprehensive product portfolio;
- Accelerating XP Power's innovation through access to broader
R&D resources and technologies;
- Providing support from a leadership team with deep power and
semiconductor industry experience;
- Creating greater opportunities for employees’ career
advancement, development and mobility within the larger
organization; and
- De-risking XP Power's standalone business plan.
Advanced Energy would welcome the opportunity to engage in a
constructive dialogue with the Board of XP Power and receive access
to necessary diligence.
“We believe that the proposed offer for XP Power provides
compelling value for both Advanced Energy's and XP Power's
shareholders,” said Steve Kelley, the president and CEO of Advanced
Energy. “By expanding our portfolio of products and technologies,
and combining our technical capabilities, we believe we will be
better able to meet the growing needs of our customers.”
Advanced Energy's shareholders do not need to take any action at
this time.
Rationale for the Offer
Advanced Energy's proposed offer is consistent with the
company’s strategy to focus on precision power and deliver more
value to customers in Industrial, Medical and Semiconductor
applications. Advanced Energy's strategy is to grow revenue with
highly engineered customized power conversion solutions. XP Power's
engineering capabilities and product portfolio would complement
Advanced Energy's existing technology and product base.
If completed, the acquisition will extend Advanced Energy's
ability to serve its customers with a broader and deeper set of
products and technologies. For semiconductor equipment use cases,
the acquisition of XP Power would expand a portfolio of embedded
system power solutions which would broaden Advanced Energy’s
ability to support its OEM customers. For Industrial and Medical
applications, the acquisition of XP Power would complement Advanced
Energy's offerings and extend its geographic footprint with an
expanded presence in the U.S., Europe, and Asia Pacific.
Advanced Energy is leveraging its strong balance sheet with over
$1.0 billion of cash on hand and low-cost debt to create
significant long-term value for its shareholders. If completed, the
acquisition of XP Power will offer opportunities for Advanced
Energy to grow its earnings and expand its gross margins.
Additional Information Regarding this Announcement
There can be no certainty that any firm offer will be made, nor
as to the terms on which any firm offer might be made. Any offer
for XP Power, if made, will be made in accordance with section 139
of the Securities and Futures Act 2001 of Singapore and the
Singapore Code on Take-overs and Mergers (the "Singapore Takeover
Code”), and be subject to the jurisdiction of the Securities
Industry Council of Singapore (the "Council"), which administers
the Singapore Takeover Code. Such an offer (if any) would not be
subject to the jurisdiction of the UK Panel on Takeovers and
Mergers which administers the City Code on Takeovers and Mergers
(the “UK Takeover Code”).
In consultation with the Council, Advanced Energy has undertaken
to, by not later than 5.00 pm (London time) on June 18, 2024, being
28 days after this announcement date to announce a firm intention
to make an offer for the shares of XP Power in accordance with Rule
3.5 of the Singapore Takeover Code or announce that it does not
intend to make an offer. This deadline can be extended with the
consent of the Council, at the request of XP Power, taking into
account all relevant factors, including (a) the status of
negotiations between Advanced Energy and XP Power, and (b) the
anticipated timetable for their completion.
In the event that Advanced Energy announces that it does not
intend to make an offer for XP Power, Advanced Energy and any
person acting in concert with it will be prevented from announcing
an offer or possible offer for XP Power or taking certain other
action for six months from the date of such announcement, except in
the circumstances permitted by Note 1 on Rule 33.1 of the Singapore
Takeover Code and specified in the announcement.
About Advanced Energy
Advanced Energy Industries, Inc. (Nasdaq: AEIS) is a global
leader in the design and manufacture of highly engineered,
precision power conversion, measurement and control solutions for
mission-critical applications and processes. Advanced Energy’s
power solutions enable customer innovation in complex applications
for a wide range of industries including semiconductor equipment,
industrial production, medical and life sciences, data center
computing, networking, and telecommunications. With engineering
know-how and responsive service and support for customers around
the globe, the company builds collaborative partnerships to meet
technology advances, propels growth of its customers and innovates
the future of power. Advanced Energy has devoted four decades to
perfecting power. It is headquartered in Denver, Colorado, USA. For
more information, visit www.advancedenergy.com.
Further Information
J.P. Morgan Securities Asia Private Limited ("J.P. Morgan") is
acting as lead financial adviser exclusively for Advanced Energy
and no one else in connection with the matters set out in this
announcement. J.P. Morgan will not regard any other person as its
client in relation to the matters in this announcement and will not
be responsible to anyone other than Advanced Energy for providing
the protections afforded to clients of J.P. Morgan or its
affiliates, nor for providing advice in relation to any matter
referred to herein.
The Hongkong and Shanghai Banking Corporation Limited, Singapore
Branch (“HSBC”) is acting as joint financial adviser exclusively
for Advanced Energy and no one else in connection with the matters
set out in this announcement. HSBC will not regard any other person
as its client in relation to the matters in this announcement and
will not be responsible to anyone other than Advanced Energy for
providing the protections afforded to clients of HSBC or its
affiliates, nor for providing advice in relation to any matter
referred to herein.
The distribution of this announcement in jurisdictions outside
the United Kingdom may be restricted by law and therefore persons
into whose possession this announcement comes should inform
themselves about, and observe, such restrictions. Any failure to
comply with the restrictions may constitute a violation of the
securities law of any such jurisdiction.
The directors of Advanced Energy (including those who may have
delegated detailed supervision of this announcement) (“Directors”)
have taken all reasonable care to ensure that the facts stated and
all opinions expressed in this announcement are fair and accurate
in all material respects and that no material facts have been
omitted from this announcement, and they jointly and severally
accept responsibility accordingly. Where any information has been
extracted or reproduced from published or otherwise publicly
available sources, the sole responsibility of the Directors has
been to ensure, through reasonable enquiries, that such information
has been accurately extracted from such sources or, as the case may
be, reflected or reproduced in this announcement.
A copy of this announcement will be made available on
https://www.advancedenergy.com/ no later than 12 noon (MT) on the
business day following the date of this announcement. The content
of the website referred to above is not incorporated into and does
not form part of this announcement.
Important Notices
Not for release, publication or distribution, in whole or in
part in, into or from any jurisdiction where doing so would
constitute a violation of the relevant laws or regulations of that
jurisdiction.
This announcement is not intended to, and does not, constitute
or form part of any offer, invitation or the solicitation of an
offer to purchase, otherwise acquire, subscribe for, sell or
otherwise dispose of, any securities whether pursuant to this
announcement or otherwise.
The distribution of this announcement in jurisdictions outside
the United Kingdom and Singapore may be restricted by law and
therefore persons into whose possession this announcement comes
should inform themselves about, and observe, such restrictions. Any
failure to comply with the restrictions may constitute a violation
of the securities law of any such jurisdiction.
The directors of Advanced Energy do not accept any
responsibility for any information relating to XP Power or any
opinion or rationale expressed by XP Power.
Summary of Disclosure Requirements under the Singapore
Takeover Code
Dealings by investors
Rule 8 of the UK Takeover Code does not apply to XP Power, and
the Singapore Takeover Code does not require investors to make
public disclosures of their positions or dealings in relevant
securities of the parties to an offer, except dealings by parties
to an offer or their associates. However, as XP Power is admitted
to trading on a regulated market in the United Kingdom, the vote
holder and issuer notification rules set out in Chapter 5 of the
Disclosure Guidance and Transparency Rules (“DTRs”) apply to XP
Power, and will continue to apply to it irrespective of the
commencement or duration of the offer period under the Singapore
Takeover Code. Any person who is in doubt of his or her obligations
under the DTRs is advised to obtain appropriate legal advice.
For the avoidance of doubt, as XP Power is not listed on the
Official List of the Singapore Exchange Securities Trading Limited,
the provisions of the Securities and Futures Act 2001 of Singapore
relating to disclosure of interests in securities do not apply to
XP Power.
Dealings by parties to an offer
Pursuant to Rule 12 of the Singapore Takeover Code (“Rule 12”),
dealings in relevant securities of an offeree company such as XP
Power during an offer period must be:
(i)
publicly disclosed, if the dealing is by
an offeror, the offeree company or any of their associates for
their own accounts or for the account of their discretionary
clients (see Rule 12.1); and
(ii)
privately disclosed to the SIC, if the
dealing is by an offeror, the offeree company or any of their
associates for the account of non-discretionary investment clients
(other than the offeror, the offeree company and any of their
associates) (see Rule 12.2).
Where an offeror, the offeree company or any of their associates
deal in relevant securities of an offeree company during an offer
period only as brokerage agents for investment clients and not as
principal, such dealings do not need to be disclosed, whether
publicly or privately to the SIC (see Rule 12.3).
Any disclosure of dealings which is required to be made pursuant
to Rule 12 must be made no later than 12 noon GMT on the dealing
day following the date of the relevant dealing (see Note 4 on Rule
12).
Any public disclosure of dealings in relevant securities must be
made in writing via an RIS and to the SIC (see Note 5(a) on Rule
12).
A private disclosure of dealings in relevant securities must be
made in writing to the SIC. The SIC has the right under the
Singapore Takeover Code to make public such information when
circumstances warrant it (see Note 5(b) on Rule 12).
General
Further information on the Singapore Takeover Code is available
on, and a copy of the Singapore Takeover Code is available for
download from, the website of the SIC at www.mas.gov.sg/sic. Any
person who is in any doubt about his or her obligations under the
Singapore Takeover Code is advised to consult his or her
professional advisers immediately.
Forward-Looking Statements
This release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
Statements in this release that are not historical information are
forward-looking statements. For example, statements relating to our
beliefs, expectations and plans are forward-looking statements, as
are statements that certain actions, conditions, or circumstances
will continue. These forward-looking statements include, among
others, statements relating to our business and our results of
operations, a potential transaction with XP Power and our
objectives, strategies, plans, goals and targets. The factors that
could cause our actual results to differ materially from
expectations include but are not limited to the following factors:
(a) the ability of Advanced Energy and XP Power to enter into a
definitive agreement for a transaction; (b) satisfaction or waiver
of the conditions to closing of any transaction (including by
reason of the failure to obtain any necessary regulatory approvals)
in the anticipated timeframe or at all; (c) the risk that a
transaction may not occur; and (d) fluctuations in our financial
results; and other factors described under the captions “Risk
Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in Advanced Energy's most
recent Annual Report on Form 10-K filed by Advanced Energy with the
Securities and Exchange Commission and in any subsequently filed
Form 10-Q. These reports and statements are available on the SEC’s
website at www.sec.gov. Copies may also be obtained from Advanced
Energy's investor relations page at ir.advancedenergy.com or by
contacting Advanced Energy's investor relations at +1 970 407 6555.
Advanced Energy cautions shareholders and prospective investors
that actual results may differ materially from those indicated by
the forward-looking statements. Advanced Energy undertakes no
obligation to publicly update or revise any forward-looking
statements made by Advanced Energy or on its behalf, whether as a
result of new information, future developments, subsequent events
or changes in circumstances or otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20240520370119/en/
Enquiries Advanced Energy Investor and Press
Relations Edwin Mok – Investor Relations, +1 970 407 6555 Simon
Flat – Press Relations, +44 (0) 797 624 5243
J.P. Morgan (Lead Financial Adviser to Advanced Energy)
Drago Rajkovic James Robinson Richard Walsh +44 (0) 207 134
1482
HSBC (Joint Financial Adviser to Advanced Energy) Anthony
Parsons Alex Thomas Frank Ehrlich +44 (0) 207 991 8888
Advanced Energy Industries (NASDAQ:AEIS)
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