David Newlands, chairman of Touchstone Innovations, the commercialisation firm spun out of Imperial College London (ICL), yesterday wrote to shareholders further explaining the board’s decision to reject the approach from rival IP Group.
Newlands noted IP Group’s announcement of a firm intention on June 20, which confirmed the support of Touchstone’s three biggest shareholders – Invesco Asset Management, Woodford Investment Management and Lansdowne Developed Markets Master Fund – which together own 74.3% of Touchstone and 50% of IP Group.
His letter said: “As I noted in my letter June 1 2017, I first received a letter from IP Group setting out the indicative non-binding terms for a recommended all-share merger of Touchstone and IP Group on April 4 2017.
“Since that time a possible transaction has been described by IP Group variously as a ‘merger’, a ‘takeover’ and a ‘combination’.
“Notwithstanding these differing descriptions, the offer represents an unwelcome hostile takeover offer.
“During the discussions that the board of Touchstone has had with IP Group since April, we have raised a number of topics that we believe would need to be addressed in order for a combination to be capable of being recommended by your board.
“These included the need for agreement on valuation, people, strategy and business model, and portfolio balance.
“Having considered the firm intention announcement carefully, your board notes that the offer does not address the concerns that your board had surrounding the possible offer and that consequently the offer is also not capable of recommendation by your board.”
Touchstone has a current market capitalisation of £460.84m. Newlands said the proposed offer – based on a closing price of 134p per IP Group share on June 19 – the last business day before the firm intention announcement – undervalued Touchstone shares at 289p each.
He also said dragging out the situation for the past three months had “had a detrimental effect on new business and on our relationships with co-investors. Morale is being undermined, recruitment plans are on hold and our employees are uncertain about their future.”
Having reviewed the offer and all the aforementioned reasons, Newlands reiterated the board continued to hold the view it could not recommend the offer on its current terms but that if the terms of the offer were improved, it would be open to engaging in further discussion.
“Your board advises the company’s shareholders to take no action in relation to the offer.”
Global University Venturing previously took an in-depth look at the ongoing saga, how it might affect the British ecosystem and how it is seen by others in the industry.
