Since last month, intellectual property services provider QANTM (ASX: QIP) has come into the spotlight following strong H1 FY24 results. So much so that it caught the eye of three companies wanting to acquire it.
QANTM capitalises on the growth of the broader intellectual property rights industry. Australian businesses with IP rights account for around 35% of Australia’s Gross Domestic Product (GDP) and jobs for 2.6 million Australian workers.
Responding to media speculation from the AFR, the Company confirmed that it has received a non-binding indicative offer from the Sydney buyout firm Adamantem Capital in relation to a potential acquisition of all the shares in QANTM for $1.817 per share by way of a scheme of arrangement. This follows a proposal from the UK-based IP company Rouse, revealed in a similar fashion following speculation.
QANTM owns a group of intellectual property (IP) services businesses in Australia, New Zealand, Singapore, Malaysia and Hong Kong under key brands Davies Collison Cave, DCC Advanz Malaysia, Davies Collison Cave Law, FPA Patent Attorneys, and Sortify.tm Ltd. It provides services across the IP value chain to a broad range of Australian and international clients, ranging from start-up technology businesses to Fortune 500 multinationals, public research institutions and universities.
The bidding war follows QANTM’s strong financial performance in H1 FY24, when the Company posted its best result since listing. Its service charges grew by 9.2% on PCP, patents were up 6.6% to $37.8m, trademarks up 7% to $11.1m and legal services up 27.3% to $7.9m.
The total revenue saw 8.1% growth on H1 FY23 to $74.2m. NPAT rose by 43.4% to $7.4m while earnings stood at $16m.
The Adamantem Indicative Proposal is all cash with a scrip election of up to 50%. On the other hand, the Rouse proposal has not had its details fully disclosed.
Adamantem is an Australian-based private equity investor while Rouse is a UK-based international intellectual property firm operating in 12 jurisdictions, with a significant emphasis on the Asia Pacific region. It is highly complementary in both geographic and service lines to QANTM. But it does not have a physical presence in Australia.
Rouse made its bid on February 27, 2024, around the same time when competitors Quadrant Private Equity and Adamantem Capital indicated their interest, too.
QANTM noted that the Adamantem Indicative Proposal represents a higher price than the Rouse Indicative Proposal, but has not yet been comprehensively assessed by the QANTM Board.
As of now, no agreement has been reached between QANTM and any party in relation to the value, structure or terms of a transaction.
The QANTM Board has asked shareholders to take no action in regard to either proposal.
Alinda is a Business Reporter for The Sentiment
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