Sale of Bulgin completes, name change ahead and tender offer details

Companies: Checkit plc

Elektron Technology (EKT) have finally completed on the sale of Bulgin to Equistone Partners Europe. The total received was £104.7m however, after adjustment for expenses and the settlement of the LTIP liability, net proceeds are c. £94m. The interesting part here is that to return the cash to shareholders EKT will undertake a 2 for 3 tender offer at 65p. More details about this will be announced later this Autumn.

So what’s left of EKT now that Bulgin is no longer a part of the company? Well the clue is in the imminent name change to Checkit plc (ticker change to CKT LN). The Checkit part of the business has been the focus for Keith Daley the Executive Chairman this year. In May he bought Next Control Systems which has neatly slid into position to affirm the new business proposition now that the hugely successful Bulgin has been peeled off. Note: Elektron Eye Technology still sits alongside the main part of the business but this will be sold as it is non-core.

Combined, the existing Checkit offering plus Next’s brands, Tutela and Axon offer a solid and very interesting growth area in real time operations management systems. In English that means that paper checklists are no more. Bespoke hardware and software currently already serve the health, life sciences, food retail and leisure industries. The potential for growth for the products which cover for example, temperature control, building systems monitoring, food safety monitoring and hospital needs is not fully reflected in the current share price.

The remaining Checkit business will have a c. £15m cash position as a result of this deal and the tender offer. The purchase of Next on multiples much more aligned with an industrial means that this new SaaS offering looks very interesting in valuation terms. The continued reinvestment back into the Checkit side of the business stands Checkit on strong ground to continue to grow and deliver.

The information contained within this post is based on personal experience and opinion and should not be considered as a recommendation to trade nor financial advice.