Touchstone Innovations, a tech incubator spin-out from Imperial College London, looks set to be bought out by IP Group despite rebuffing its improved offer.
IP Group, which works alongside top universities to commercialise ideas, this morning offered Touchstone shareholders more shares in the combined group in return for their Touchstone stakes.
The shareholders will now receive 2.2178 shares in the new group for every one of their old shares, up from the 2.149 originally proposed.
Yet the “improved” offer actually decreased in value, since IP Group's share price has dropped since the first offer. The latest offer implies a share price of 304p per Touchstone share, as opposed to 307p derived from the possible offer announced in May.
Valuing Touchstone at £490m, this would represent a two per cent discount to net asset value.
Despite this, and the announcement from Touchstone's board urging shareholders to turn down the offer, the takeover looks set to proceed.
Imperial College issued a non-binding letter of intent in favour of the offer, taking support for the offer to 89.7 per cent of issued share capital.
A formal acceptance from Imperial College would haul IP Group over the 75 per cent threshold it needs, after it already received irrevocable undertaking from major shareholders including Woodford Investment Management, Invesco Asset Management and Lansdowne Partners.
“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,” said a spokesperson for the Endowment Board of Imperial College London.
“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.”
If the offer is accepted in full, Touchstone shareholders would own approximately 34 per cent of the newly combined group and IP Group shareholders would own approximately 66 per cent.