University spin-out merger decision: lessons to be learned

By Rosemary Choueka

Before it disappeared into the wide blue yonder, the Office of Fair Trading (OFT) published its merger decision in the acquisition by IP Group (IPG) of Fusion IP. There aren’t all that many UK merger decisions in which IP rights are the central assets of the merging parties, so this one particularly caught our attention. The deal involved the purchase by IPG of all of the shares in Fusion — prior to the deal, IPG held a 20.1 per cent stake in Fusion. Both entities provided equity finance and associated services to spin-out companies from higher-education institutions (HEIs). The OFT noted that they play a key role in investing in early-stage technology, which is still unproven and therefore cannot attract ‘general’ investors.

The arguments on market definition are particularly interesting. The parties tried to make the case that the relevant market was the equity investment market for small private technology companies — an obvious move, to broaden the scope of the market and therefore reduce their market shares…

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