31st Jul 2019 12:03
(Alliance News) - Elektron Technology PLC on Wednesday said it has entered into a conditional agreement with a special purpose vehicle wholly-owned by investor Equistone Partners Europe to sell Elektron Technology UK Ltd, which trades as Bulgin, for GBP105 million in cash.
The stock was up 10% around midday in London at 54.00 pence a share, giving Electron a market capitalisation of GBP100.5 million, so the price being received for the Bulgin arm is slightly more than the market cap of the entire company.
Apart from Bulgin, an electrical components manufacturing unit, Elekton also operates Checkit, a work management platform, and Elektron Eye Technology, an ophthalmic equipment provider.
For the year to the end of January, Elektron generated revenue of GBP33.7 million, of which GBP30.1 million was delivered by Bulgin.
Net proceeds from the Bulgin disposal, after all costs, are expected to be in the region of GBP94 million, Elektron said. The proposed transaction will result in a major restructuring of the company, said.
Elektron intends to switch to a service-as-a-software company, focussed on what it called the fast growing field of real-time operations management, from a specialist electronics manufacturer.
The AIM-listed company said the transaction will maximise the amount of cash that will be available for reinvestment or distribution to the shareholders. Elektron said it currently expects to return the "significant" majority of the net proceeds after costs to shareholders by way of a tender offer for its shares.
In addition, the company said it will change its name to Checkit PLC, to reflect the future business.
"Once we have completed the transaction the remaining group and team shall be able to focus all of our energies on Checkit," said Executive Chair Keith Daley. "The vision is to create a global leader in real-time operations management software."