Action packed for Checkit (CKT)
Busy week from Checkit...This has been an active news flow week. Firstly came the announcement of signing a major contract with BP for the use of Checkit real time operations management products. Then secondly we have had the publication of the full timetable for the tender offer.
One of the questions that has been lingering for Checkit is how the company can maintain or boost the growth in sales this financial year and indeed thereafter. The sale of highly cash generative Bulgin has left this point understandably open to query. The answer has come in a major contract award from BP who will use Checkit’s hard and software in over 320 of their company owned petrol stations nationwide. The impact of this is a minimum 3 year long uplift to sales from this contract alone and the potential for BP to use the Checkit system in other geographies.
The deal is solely for temperature monitoring and product planning so there is room for expansion into other Checkit products if this goes well. Discussions are already on the table for the same products to be used at dealer-owned sites potentially too. So this is not the end of this part of the story.
Management have worked hard on seeking out this new contract and to tie up the deal. It will be interesting to see how this influences other possible sideline spectators to also buy into Checkit products.
The other key news event for Checkit this the week is the announcement of the start of the tender offer on the 1st November and the subsequent timetable which gives the outline for the next 3 weeks until the tender offer closes on the 22nd November. As already published, the offer is a 2 for 3 share offer at 65p. So this means that (with regards to listed restrictions) if you are a shareholder on the 22nd November you are eligible to be part of the tender offer. The tender is at a 16.1% premium to the 56p share price on the 31st October. It’s a neat way of returning cash to share holders and lucrative for those who are on board.
The announcement of the results of the tender offer is on the 26th November and the purchase of the shares will be on the 28th November. The whole deal will be fully wrapped up by the 5th December.
So all in all it has been an active week for Checkit. It has certainly been a tick in the box for strengthening their sales growth which is exactly what the doctor ordered to boost the Checkit plus Next brand proposition. The tender offer uptake will also be very interesting to follow during this month.