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Baird: RPX Corp. Buyout Would Be An ‘Incremental Positive’

Courtesy of Benzinga.

Baird: RPX Corp. Buyout Would Be An 'Incremental Positive'

Patent risk management services company RPX Corp (NASDAQ: RPXC) has long been rumored to be a takeover target. In March, the company was reportedly approached by private equity firms regarding a potential buyout. Recent M&A speculation surrounding the company led to comments on the rumor from Baird in a Wednesday note. 

The Analyst

Baird analyst Jeffrey Meuler reiterated his Outperform rating and $15 price target on RPX Corp. 

The Thesis

RPX reportedly received a takeout offer from a private consortium for $16.25 per share or $800 million, a 27-percent premium to the current share price, Meuler said. (See the analyst’s track record here.) 

The rumor, reported by patent/IP media source IAM, was unconfirmed beyond their story, Mueler said.

IAM attributed the news to “two sources with knowledge of the offer”; the Baird analyst noted the departure of the company’s former CEO John Amster was reported by IAM before it was formally announced by RPX. 

Baird, which was becoming less confident in a potential offer, views a takeout offer as an incremental positive if the report proves to be correct. RPX’s balance sheet remains overcapitalized and would be a meaningful beneficiary of potential tax reform, Meuler said. 

Shares of RPX trade materially below the intrinsic value for a competitively advantaged company with largely subscription revenue, an attractive client base and solid renewal rates, the analyst said. The IAM article suggested potential for ” [a] material positive catalyst potentially in the near term,” according to Baird. 

The Price Action

The shares of RPX are up about 24 percent year-to-date.

At the time of writing, the stock was rallying 11.40 percent to $14.25. 

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Latest Ratings for RPXC

Date Firm Action From To
Oct 2017 Barclays Maintains Underweight
Feb 2017 Baird Upgrades Neutral Outperform
Jul 2016 Barclays Maintains Underweight

View More Analyst Ratings for RPXC


View the Latest Analyst Ratings

Posted-In: Baird Jeffrey Meuler M&A PatentsAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga


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