IP Group has upped its bid for Touchstone to $640m and gained the approval of Imperial College London, making a takeover more likely.

UK-based commercialisation firm IP Group has upgraded its takeover bid for its peer Touchstone Innovations, spun out of Imperial College London, to £490m ($640m) from £466m.

The offer however falls short of Touchstone’s net assets, the value of which stood at £502.2m as of June 30 – roughly a 10% increase from the £455.9m at the start of its financial year in August 2016. The value of its 113-strong portfolio meanwhile stands at £440.3m.

Imperial College London has also ended its silence on the matter, signing a non-binding letter of intent to IP Group.

In its letter, the endowment board of Imperial College London, said: “Since its formation, Touchstone has supported scientists and entrepreneurs in the commercialisation of their ideas.

“As the founding shareholder of Touchstone, we value the efforts of the team in creating a diverse portfolio of businesses based on university intellectual property. We also recognise that this could not have been achieved without our largest co-shareholders, Invesco, Woodford and Lansdowne, and we thank them for their longstanding support.

“We value the Touchstone employees and management and welcome the proposals IP Group has made in that regard. We are supportive of the strategic rationale of this transaction and appreciate the increased value for Touchstone’s shareholders implied by the New Exchange Ratio. As a result of these factors, we would be willing to accept the improved offer.”

Support for the takeover has now grown to 89.7% of Touchstone’s issued share capital, increasing the likelihood the merger will go ahead despite the board’s – and some shareholders’ – apprehension.

If the acquisition goes ahead, Touchstone shareholders would hold approximately 34% in the combined entity, with the remainder owned by IP Group’s stakeholders.

Alan Aubrey, chief executive of IP Group, said: “We welcome Imperial College’s support and remain confident that the enlarged group will be well placed to build significant shareholder value as we create an international leader in IP commercialisation.”