XP Power facing $40m in damages as US court rules in favour of Comet

(Sharecast News) - XP Power said on Thursday that it may have to cough up $40m in damages after US rival Comet won a trade secret misappropriation lawsuit against the London-listed power solutions provider.

Comet had alleged trade secret misappropriation relating to radio frequency match and generator technology. XP power said a jury in the US trial - which began on 14 March - found in favour of Comet, awarding the damages against XP.

"XP Power was hopeful that it would prevail on all claims and appreciates the hard work the jury put into this case and respects the decision, however the group is disappointed with the judgement, with which it does not agree," it said.

"The board will now consider the judgement in detail before deciding on next steps."

XP Power said further announcements will be made as appropriate.

At 1315 GMT, the shares were down 3.3% at 3,485p, having traded as low as 3,197.05p earlier.

Numis, which rates the stock at 'buy', said: "We believe that XP Power has the option to appeal the jury's verdict, so this case may not have reached a conclusion at this point. This morning the board of XP Power has confirmed that it will now consider its next steps, opening up the prospects that this case may carry on for sometime.

"To quantify the impact of the ruling, during FY21 XP Power incurred legal costs of £10.1m in relation to the case, and no provision in relation to the dispute had been made, reflecting management's view that their was no merit to the lawsuit. The cash outflow of the amount awarded in the ruling would take current year ND/EBITDA up to a manageable 1.5x level, so can be absorbed by the group though the reputational impact is harder to quantify at this point, though we believe this ruling does not impact the current product portfolio or orders already secured.

"The shares currently trade on an FY22 P/E of 18.2 and an EV/EBIT of 15.5x. "

Xp Power