Checkit PLC (AIM:CKT, OTC:ECKTF), the technology company, has announced plans to merge with fellow rival Crimson Tide (AIM:TIDE) for £12 million.
As per the offer, Checkit would value Crimson Tide (AIM:TIDE) shares at 182p each, representing a 12% premium to its middle market closing price of 162.5p on June 3.
A single share owned by a Crimson Tide (AIM:TIDE) investor would convert to seven Checkitt shares, meaning should the former accept the offer its shareholders would own around 30% of the enlarged group.
Checkit believes the acquisition would help both groups “create a scaled workflow software company” that would present a more attractive investment opportunity.”
“Significant potential revenue and cost synergies identified by Checkit, could result in the enlarged company attracting a wider pool of investors and consequently being attributed higher valuation multiples by the market,” a statement said.
In addition to creating additional liquidity for both sets of investors, Checkit believes the enhanced product offering could present multiple opportunities for cross-selling and upselling.
Kit Kyte, chief executive officer of Checkit, said: "The Checkit Board has long believed that the combination of Checkit and Crimson Tide is an obvious and positive strategic step for both companies.
“We believe it will position the enlarged entity as a market leader in workflow software solutions, leveraging the strengths of both organisations for enhanced profitability.”