IP Group updates Touchstone offer

UK-based commercialisation firm IP Group yesterday updated its offer to acquire its peer Touchstone Innovations, a spinout of Imperial College London that still handles the institution’s tech transfer through the Imperial Innovations division.

The new offer values Touchstone at £466m – down from the previous valuation of approximately £500m. If the merger goes ahead, Touchstone’s shareholders would own approximately 33% of the combined entity, and IP Group’s investors would own 67%.

As part of the updated offer, Russ Cummings, chief executive of Touchstone, would join the board of the new company and, with IP Group’s chief operating officer, lead the integration effort.

IP Group has also acknowledged the concern of Touchstone’s chairman David Newlands, who wrote a letter to shareholders that the takeover does not recognise his firm as a people-based business.

IP Group has committed to maintaining a stable headcount across both parts of the combined entity for a minimum period of 12 months and will allow the three current executive directors of Touchstone to move to the combined entity for the duration of the integration process.

Two non-executive directors of Touchstone would also become non-executive directors of the combined group, with one appointed as senior independent director and the other as chair of the remuneration committee, as chosen by IP Group.

IP Group confirmed that Touchstone Innovations continued to reject the offer as recently as last Friday. IP Group has however received the support from Touchstone shareholders representing a total of 74.3% of shares.

If the takeover goes ahead, IP Group will seek to delist Touchstone’s shares from Aim.

Alan Aubrey, CEO of IP Group, said: “We believe that the combination of IP Group and Touchstone Innovations creates an international leader in IP commercialisation and a business that is greater than the sum of the two parts.

“IP Group and Touchstone operate in a sector that historically has been funded by a small group of shareholders who have shown continued support and commitment to the innovation industry in the UK.

“Through our recent capital raise, IP Group has brought new investors into the sector from Australia, Singapore, China and the UK.

“The board believes that, with its larger and more diversified portfolio, the combined group will be even more attractive not only to current and potential new investors but also to other stakeholders including university partners and talent.

“The board recognises the skills and expertise of the employees of both companies and continues to believe that the combined hroup will lead to greater opportunities for team members on both sides.

“I look forward to discussing these opportunities and the proposals we have detailed above with IP Group and Touchstone employees at the earliest opportunity.

“Our preference has always been to announce an offer with the full support of the board of Touchstone. We had a number of constructive conversations with the management of Touchstone, in particular around building on the combined group.

“Unfortunately, we could not come to an agreement with the Touchstone board. We believe that our offer is attractive for the reasons listed above and have decided to make a firm offer directly to the Touchstone shareholders.

“We remain open to engagement with the Touchstone Board at any point regarding our offer.”