XP Firmly Rejects £571m Bid Amid Company Takeover Speculation

XP Power, a Singapore-based company, has firmly rejected a cash offer from Advanced Energy in the US to acquire the company for £571 million. The offer of £19.50 per share was deemed inadequate by XP Power, which described it as a "series of highly conditional, opportunistic, indicative proposals." Advanced Energy now has until June 18th to consider increasing its offer.

Despite being based in Singapore, XP Power is not subject to the jurisdiction of the UK Panel on Takeovers and Mergers, which administers the City Code on Takeovers and Mergers. Advanced Energy, on the other hand, has committed to announcing whether it will make a firm offer by June 18 in compliance with Rule 3.5 of the Singapore Takeover Code. Failure to do so would result in a six-month restriction on making an offer.

Following the rejection of the offer, Advanced Energy went public with its proposal. The deal, valued at £571 million, includes a debt of £103 million and would be financed using the $1.0 billion cash reserve on its balance sheet. The company believes that its offer presents a compelling opportunity for XP Power's shareholders, especially considering recent financial developments.

The latest trading update from XP Power revealed a decline in Q1 revenue to £64.6 million, a 15% decrease from the previous year. Order intake also saw a significant drop to £43.7 million, down 27% from the previous year. While sales in the Semiconductor Manufacturing Equipment sector remained steady, the Healthcare and Industrial Technology sectors experienced a slowdown due to customer destocking.

Advanced Energy views the potential acquisition of XP Power as a strategic move to reduce cyclicality and expand its global market presence. The company's President and CEO, Steve Kelley, emphasized the value the acquisition would bring to both sets of shareholders by enhancing product portfolios and technical capabilities to better serve customer needs.

For semiconductor equipment applications, acquiring XP Power would enable Advanced Energy to broaden its range of embedded system power solutions, enhancing support for OEM customers. In Industrial and Medical sectors, the acquisition would complement Advanced Energy's offerings and extend its reach in key markets such as the US, Europe, and Asia Pacific.