Shareholders in technology group Checkit (CKT:55p), formerly known as Elektron Technology, are on course for bumper £81m cash return in November following the recently completed disposal of Bulgin, a world-class designer and maker of hermetically-sealed (air and watertight), fail-safe circular connectors. Documents will be sent to shareholders in the coming days that will offer them the chance to tender their shares at 65p on the basis of two shares repurchased for every three held. That’s a 48 per cent premium to the 44p entry point in my November Alpha Report.
Checkit will retain net cash of £14m to develop its business, a sum that will be augmented when its non-core Elektron Eye Technology (EET) business, a developer of portable analysers that are used to detect age-related macular degeneration, is sold off. That unit has just reported operating profit of £100,000 on revenue of £1.2m in the half year to 31 July 2019, so it could perhaps fetch £1.8m in the current market.
Based on 62m shares in issue post the tender offer, Checkit’s pro-forma market capitalisation of £21.7m (using a share price of 35p) will be two-thirds backed by cash (22p a share post tender). Also, Checkit acquired Fleet-based Next Control Systems (NCS), a leader in high-end service-based temperature monitoring for healthcare and life sciences within the UK, and data-related building energy management system services, for a net consideration of £8.8m (14p a share) in May 2019, representing 6.6 times its annual cash profit.