Advanced Energy Industries Inc. announced on Tuesday that it will not proceed with a £571 million ($724 million) offer for XP Power Ltd. of Singapore. The decision follows XP Power’s rejection of the approach from the rival power supplies maker.
Failed Engagement and Market Reaction
Advanced Energy stated it attempted to engage XP Power’s board but was unable to make progress due to differing expectations of value. This lack of progress prevented Advanced Energy from conducting the due diligence necessary for a firm offer. Shares in XP Power, listed on the FTSE All-Share index in London, dropped significantly. By midday Tuesday, shares were trading at 1,322 pence, a 15.25% decline from Monday’s close of 1,560 pence.
Advanced Energy pulls out of XP Power pursuit : Rejected Proposals
XP Power, which manufactures power supply products for healthcare, semiconductors, and industrial electronics, previously rejected an offer from Advanced Energy in May. The U.S.-based Advanced Energy had bid 1,950 pence per share, valuing XP Power at approximately £571 million. XP Power deemed the proposals opportunistic and undervalued.
No Justification for Improved Offer
Advanced Energy, which develops power conversion for semiconductors, data storage, and telecommunications equipment, indicated that it had not identified any additional factors to justify an improved offer. Consequently, under the Takeover Code of Singapore, Advanced Energy is now barred from making another offer for XP Power for at least six months.
Previous Offers and Financial Advisers
This latest proposal marked the third attempt by Advanced Energy. In October, an indicative offer valued XP Power shares at 1,700 pence each, followed by another in November at 1,850 pence each. JP Morgan Securities Asia Pte Ltd. and HSBC are serving as financial advisers to Advanced Energy, while N.M. Rothschild & Sons Ltd. and Investec advise XP Power.
Advanced Energy pulls out of XP Power pursuit : Lack of Contact Since Rejection
XP Power confirmed on Tuesday that it has had no contact from Advanced Energy since rejecting its indicative proposal.
