Advanced
Energy Announces Possible All-Cash Offer to Acquire XP Power
Limited
DENVER, Colo., May 21,
2024 - 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:
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On October 24, 2023, at £17.00 per
share in cash, valuing XP Power's equity at £339m;
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On November 5, 2023, at £18.50 per
share in cash, valuing XP Power's equity at £369m; and
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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").
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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:
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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);
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·
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a 82% premium to XP Power's
30-trading day volume weighted average price of £10.74 as of May
20, 2024;
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·
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a 70% premium to £11.50 per share
raised on the November 6, 2023 Fundraising;
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·
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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;
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·
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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
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·
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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.
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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:
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Providing additional scale and resources necessary to
compete more effectively in the precision power industry;
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Reducing cyclicality as part of a
larger company with a broader global market presence;
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Enhancing XP Power's position as a
strategic supplier with a more comprehensive product
portfolio;
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Accelerating XP Power's innovation
through access to broader R&D resources and
technologies;
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Providing support from a leadership
team with deep power and semiconductor industry
experience;
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Creating greater opportunities for
employees' career advancement, development and mobility within the
larger organization; and
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De-risking XP Power's standalone
business plan.
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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
Enquiries
Advanced Energy Investor and Press Relations
Edwin Mok - Investor
Relations
Simon Flat - Press
Relations
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+1 970 407
6555
+44 (0)
797 624 5243
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J.P.
Morgan (Lead Financial Adviser to Advanced
Energy)
Drago Rajkovic
James Robinson
Richard Walsh
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+44 (0)
207 134 1482
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HSBC
(Joint Financial Adviser to Advanced Energy)
Anthony Parsons
Alex Thomas
Frank Ehrlich
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+44 (0)
207 991 8888
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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)
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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
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(ii)
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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).
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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.