- Agreed takeover at 82p per share
- Equivalent to 50% premium
- Shares trade above offer price
Industrial chain and torque transmission-maker Renold (RNO) has agreed an all-cash acquisition from MPE (Morganthaler Private Equity) equivalent to 82p per share, valuing the company at approximately £186.7 million.
The offer price represents a premium of 50% to the closing price on 19 May, the day before Renold revealed it had received two separate, unsolicited all-cash proposals, one at 81p per share from a consortium comprising Buckthorn Partners and One Equity Partners, and one at 77p per share from MPE.
The shares jumped 11% to 84p, the highest price since 2015 and a premium to the offer price, suggesting investors expect the consortium to come back with a counter-offer given there is just 1p difference between the two deals.
WHY THE BOARD IS RECOMMENDING THE OFFER
Renold chair David Landless explained: ‘The Renold board believes the (MPE) offer not only represents a significant premium and provides shareholders with the certainty of a cash consideration but also provides an opportunity to deliver on our strategy more quickly.’
The board also expressed some frustration over the performance of the shares given the strategic and financial progress achieved by the business, which has increased its revenue by 46% and its operating profit by 160% since 2021.
‘The Renold directors believe the long-term potential of the group, as a market-leading growth business in a fragmented industry, has not been adequately reflected in the price and valuation rating,’ the company argued, adding that investor sentiment towards UK smaller companies remained ‘subdued.’
Nevertheless, the board expressed confidence that the company’s growth strategy would create ‘significant value, over the long-term.’
Private equity group MPE believes the combination of Renold with one of its portfolio companies, Webster Industries, represents a strategic step forward in Webster’s long-term vision to build a global leader in automation, materials handling and power transmission solutions.
