Fusion IP agrees to takeover offer from partner

IP Group has agreed to buy the 80 per cent stake it does not already own in Fusion IP for about £70m in stock.

The deal offers Fusion IP shareholders 0.446 IP Group shares for every share held, or a premium of about 27 per cent to the stock’s Wednesday close.

The deal values Fusion IP at 80.2p per share or about £87.8m.

IP Group currently owns a 20.1 per cent stake in Fusion IP, which commercialises intellectual property developed at universities and similar establishments.

Commenting on the offer, Alan Aubrey, the chief executive of IP Group, said yesterday: “Since acquiring an initial stake in Fusion IP in 2009, we have enjoyed an excellent relationship with the team and are delighted to have reached agreement to acquire Fusion IP in full.

“The acquisition is highly complementary to IP Group’s core business and will give the combined entity greater breadth of coverage, enabling us to access a wider pool of intellectual property as well as improve our service offering to existing and potential research institutions both in the UK and internationally.

“Both IP Group and Fusion IP have developed strong track records of building outstanding businesses based on intellectual property and we firmly believe that this transaction will enhance value for the shareholders of both organisations.”

David Baynes, chief executive of Fusion IP, said: “It is well recognised that IP Group has done a fantastic job in developing an innovative approach in the commercialisation of intellectual property as an asset class and we have very much enjoyed working with them since they first invested in Fusion IP in 2009.

“By becoming part of an enlarged group, I believe we will be able to better maximise the value of our growing portfolio and bring even more value to our university partners and shareholders and to the spin-out companies to whom we provide our capital and expertise. We very much look forward to it.”

In October last year, Fusion IP said the value of its investments had risen by more than a quarter over the past year, although it reported a £1.2m pre-tax loss as a result of lower net gains on investments.

The Sheffield-based company said it had a number of “exciting companies” moving towards maturity and it was looking forward to 2014 with confidence. Last October, the group reported a 26 per cent increase in the value of its investments to £25m thanks to strong performances from drug development company Diurnal, engineer Phase Focus and medical simulator MedaPhor.

Fusion holds a 43 per cent shareholding in Diurnal, which reported successful recent drug trials.

The group recently signed new agreements with the University of Nottingham and Swansea University to add to its existing agreements with the University of Sheffield and Cardiff University.

IP Group has links with 11 universities in the UK including King’s College London and the University of Oxford, and supports IP development in fields as diverse as computer-aided drug discovery to fuel cell technology and graphene.

IP Group also said yesterday that it would raise about £75m through a share placing, of which £50m would be raised through a firm placing underwritten by Numis Securities.

The IP Group has supported a number of successful Yorkshire spin-outs, including a business that could save lives by detecting heart conditions.

The IP Group is supporting the development of the Magnetometer, a device which measures the heart’s magnetic field. The scanner, which has been developed at the University of Leeds, could dramatically improve the process of diagnosing heart conditions.

The IP Group is also supporting eTect, a spin-out business that can improve the speed and accuracy of disease diagnosis

Mr Baynes told the Yorkshire Post yesterday: “We’re two very similar businesses. They’ve got 74 companies and we’ve got 21.

“It’s a very diverse portfolio. Fusion IP started in Sheffield and these two businesses will integrate seamlessly.”

He described university spin-outs as an emerging asset class.

He added: “This stuff really is the technology of tomorrow. These are serious businesses.”

Mr Baynes, who will be joining the IP Group’s board, said the combined business would have around 50 staff.

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