Crimson Tide PLC on Wednesday said a possible bid from Checkit PLC ‘significantly undervalues the company and its prospects,’ and it rejected the accusation that it had refused to engage with its suitor.

Crimson Tide is a Kent, England-based software developer and provider of the mpro5 process management application, helping companies to become more digital and their workforces more mobile.

Cambridge, England-based Checkit is a workflow management and smart sensor automation company for frontline workers.

Crimson Tide was responding to Tuesday’s announcement by Checkit of a £12 million possible offer.

Under the terms of the all-share deal, Checkit would offer 7 shares for every one held in Crimson Tide.

Based on Checkit’s closing share price of 26 pence on Monday this would value each Crimson Tide share at 182p.

Shares in Crimson Tide were unchanged at 175.00 pence each in London on Wednesday morning, giving it a market capitalisation of £11.5 million.

Checkit shares were up 0.4% to 23.60p, giving it a market capitalisation of £25.5 million.

Crimson Tide confirmed that only one formal written proposal has been made by Checkit in relation to a possible combination of the two businesses with a number of informal proposals also made.

‘The board has engaged with all serious and considered proposals and objects strongly to the suggestion that they have refused to do so,’ the company stated.

Crimson Tide said it was ‘disappointed’ that Tuesday’s announcement was made without any prior notification to the board or Crimson Tide’s advisers.

Crimson Tide said it received a proposal in January and noted the potential ‘commercial and strategic logic to such a combination’.

But it considered that the terms of this proposal were neither ‘adequate nor attractive’.

‘No revised proposals capable of consideration by the board have been received until the announcement,’ Crimson Tide added.

Crimson Tide said it continues to believe that the possible offer ‘significantly undervalues the company and its prospects and does not address the wider concerns raised by the board’, including as to governance and management of the enlarged group.

But it remains open to exploring all options that might have the benefit of enhancing value for Crimson Tide’s shareholders.

‘The board feels entirely comfortable with its outlook as a standalone entity,’ it added.

On Tuesday, Checkit said a deal offered a ‘compelling strategic opportunity’ to create a scaled workflow software company which would present a ‘more attractive investment opportunity for all shareholders than either business as a standalone entity’.

Checkit said this, along with the ‘significant’ potential revenue and cost synergies, could result in the enlarged company attracting a wider pool of investors and consequently being attributed higher valuation.

Checkit said it had, at various times, over the last four years sought to engage in constructive discussions with Crimson Tide, but those talks have never progressed.

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