Power products supplier XP Power (LON: XPP) is the highest riser on the day after an indicative bid approach at £19.50/share. The share price has not been at that level since the profit warning last September and the market price jumped 48.3% to £17.26. Premium listed XP Power has rejected the proposal by Nasdaq-listed Advanced Energy Industries.
This is the third proposal by Advanced Energy Industries and values XP Power at £468m. Back in October it offered £17/share and then in November it offered £18.50/share. That was prior to XP Power raising cash at £11.50/share.
Advanced Energy Industries, which is focusing on precision power business, has been frustrated by a lack of engagement by XP Power and it wants to appeal directly to the shareholders. The company has more than $1bn of cash on its balance sheet, so it can afford XP Power and its debt.
XP Power’s net debt is expected to be £165.9m at the end of 2024 and it is not set to fall significantly until 2026. No dividend is forecast for this year, but there could be a return to dividend payments next year.
Trading is in line with expectations. A pre-tax profit of £16.8m is forecast for 2024, rising to £29.9m next year. The 2025 prospective multiple is 20 at the indicative offer price.