REG - Checkit PLC Crimson Tide PLC - Possible Offer for Crimson Tide plc

Crimson TideAnnouncement

04/06/2024 07:00

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RNS Number : 9423Q  Checkit PLC  04 June 2024

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

 

THIS IS AN ANNOUNCEMENT OF A POSSIBLE OFFER PURSUANT TO RULE 2.4 OF THE CITY
CODE ON TAKEOVERS AND MERGERS (THE "CODE") AND DOES NOT CONSTITUTE AN
ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE
AND THERE CAN BE NO CERTAINTY THAT ANY SUCH OFFER WILL ULTIMATELY BE MADE.

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE MARKET
ABUSE REGULATION NO. 596/2014 (AS INCORPORATED INTO UK LAW BY VIRTUE OF THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018 AS AMENDED BY VIRTUE OF THE MARKET ABUSE
(AMENDMENT) (EU EXIT) REGULATIONS 2019). UPON THE PUBLICATION OF THIS
ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS
NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

 

4 June 2024

 

Checkit plc

("Checkit", the "Company" or the "Group")

 

Possible Offer for Crimson Tide plc ("Crimson Tide")

Checkit, the augmented workflow and smart sensor automation company for
frontline workers, announces a formal approach to the board of Crimson Tide
(the "Crimson Tide Board") regarding a possible all-share offer for Crimson
Tide pursuant to which Checkit would acquire the entire issued and to be
issued share capital of Crimson Tide (the "Possible Offer").

Under the terms of the Possible Offer, each Crimson Tide shareholder would
receive:

For each Crimson Tide share:  7 Checkit shares

Based on Checkit's middle market closing price of 26 pence per Checkit share
on 3 June 2024 (being the last practicable date prior to publication of this
announcement), the terms of the Possible Offer:

·    values each Crimson Tide share at 182 pence;

·    values the entire issued ordinary share capital of Crimson Tide at
approximately £12 million;

·    represents a premium of approximately 12 per cent. to the middle
market closing price of 162.5 pence per Crimson Tide share on 3 June 2024; and

·    means Crimson Tide shareholders would hold approximately 30 per cent.
of the enlarged group.

Strategic Rationale for the Possible Offer

The board of directors of Checkit (the "Checkit Board") believes that the
combination of Crimson Tide and Checkit presents a compelling strategic
opportunity to create a scaled workflow software company and furthermore
believes that a company of this increased scale would present a more
attractive investment opportunity for all shareholders than either business as
a standalone entity. The Checkit Board believes that this, along with the
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 than
either standalone company could reasonably expect to command. A broader
investor base could reasonably be expected to increase liquidity for existing
and potential new investors. The Checkit Board therefore believes that the
Possible Offer would be in the best interest of both companies' respective
shareholders and could enhance value for both sets of shareholders.

The Checkit Board believes that the combination of Crimson Tide's and
Checkit's product sets will, in due course, provide an enhanced product
offering that will benefit both companies' customers. In addition, the
enlarged company could be well positioned to offer staff wider opportunities
for training and career progression than either Crimson Tide or Checkit can as
standalone entities. The enlarged company would leverage Checkit's enhanced
research and development and recognised go-to-market capabilities, making the
integration of Crimson Tide's solutions feasible and beneficial, while also
expanding the product set available to sell to existing customers. Checkit's
significant expertise in IoT sensors may benefit Crimson Tide in its stated
aim to expand into this area, providing a technological edge and streamlining
the integration process.

The combination of the two companies would present substantial opportunities
for cross-selling and upselling Checkit's product suite to Crimson Tide's
customer base and vice versa. Crimson Tide's established presence in sectors
such as logistics, transportation, healthcare and retail aligns well with
Checkit's market focus and growth strategy. In addition to expanding the
verticals for the combined business, focus would be directed towards a
combined approach to scaling in the US, where Checkit is already well
established.

The combination would enhance the enlarged entity's position in workflow
software solutions market leveraging the strengths of both organisations for
enhanced profitability and competitive advantage whilst being more attractive
to existing and potential new investors. The Checkit Board believes that the
strategic and financial rationale to the Possible Offer provides significant
opportunities for enhanced value for both Crimson Tide and Checkit
shareholders.

Background to the Possible Offer

The Checkit Board has for a long time considered there to be compelling
strategic and financial reasons for a business combination of Checkit with
Crimson Tide and has at various times over the last four years sought to
engage in constructive discussions with the Crimson Tide Board, but those
discussions have never progressed.

In January 2024, the Checkit Board submitted an indicative non-binding
proposal to the Crimson Tide Board regarding an all-share merger on terms
similar to those proposed in this announcement. The proposal set out in detail
Checkit's views on the strategic rationale behind a combination of the two
businesses as well as the proposed terms of an all-share merger. The Crimson
Tide Board unequivocally rejected this proposal.

In April 2024, the Checkit Board again contacted the Crimson Tide Board, with
a view to establishing whether there was any appetite for an informal
discussion regarding a possible combination of the two businesses, however, it
was made clear in response to the Checkit Board that there was no willingness
on the part of the Crimson Tide Board to enter into any dialogue, even if, as
the Checkit Board believes, it might have the benefit of enhancing value for
Crimson Tide's shareholders.

The Checkit Board has noted that the Crimson Tide Board has declined to enter
into discussions regarding a possible combination given the compelling
strategic rationale for the Possible Offer as detailed above. The Checkit
Board has therefore decided to announce the terms of the Possible Offer to
facilitate direct discussions with shareholders of both Crimson Tide and
Checkit, for whom the Checkit Board believes significant benefits would accrue
from the proposed business combination. Naturally, the Checkit Board would
welcome the opportunity to engage in dialogue with the Crimson Tide Board on
the merits of a combination of the two businesses but will be mindful first
and foremost of feedback from both sets of shareholders when deciding whether
or not to proceed with a firm offer even if it does not receive a unanimous
and unqualified recommendation from the directors of Crimson Tide at any
point.

Kit Kyte, Chief Executive Officer of Checkit, commented:

"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 and competitive advantage whilst being more attractive
to existing and potential new investors. Most importantly, the Checkit Board
believes that the combination of the two businesses has the potential to
deliver value for both sets of shareholders.

"Checkit's stable management team and the Checkit Board has a track record of
successfully integrating acquired businesses. I look forward to presenting the
strategic rationale and benefits of this potential combination to Checkit and
Crimson Tide shareholders."

Pre-conditions and Reservations

This announcement does not amount to a firm intention by Checkit to make an
offer for Crimson Tide. The Checkit Board emphasises that the Possible Offer
is non-binding and as a result, it is emphasised that there can be no
certainty that an offer will be made by the Company even if the pre-condition
set out below is satisfied or waived.

The preference of the Checkit Board is to implement the Possible Offer based
on a recommendation from the Crimson Tide Board but the Checkit Board notes
that the Crimson Tide Board has on multiple occasions refused to engage in
constructive discussions regarding the Possible Offer. At this time, the
announcement by Checkit of a firm intention to make an offer for Crimson Tide
under Rule 2.7 of the Code is subject to receipt of a unanimous and
unqualified recommendation from the directors of Crimson Tide and the
provision of irrevocable undertakings on terms satisfactory to Checkit in
favour of the transaction from the directors of Crimson Tide (and their
connected persons) who are also shareholders. However, in accordance with Rule
2.5(c)(i) of the Code this pre-condition may be waived in whole or in part by
Checkit.

The announcement by Checkit of a firm intention to make an offer for Crimson
Tide under Rule 2.7 of the Code is also not subject to the completion of any
confirmatory due diligence on Crimson Tide by the Checkit Board nor, as a
share exchange offer, is it subject to Checkit finalising any funding
requirements necessary to complete the Possible Offer.

Checkit reserves the right to vary the form of the consideration referred to
in this announcement.

In addition, pursuant to Rule 2.5 of the Code, Checkit reserves the right to
set aside the terms referred to in this announcement and/or at any time to
make an offer on less favourable terms, in the following circumstances:

1)    with the recommendation or consent of the Crimson Tide Board;

2)    if a third party announces a firm intention to make an offer for
Crimson Tide; or

3)    if Crimson Tide announces a Rule 9 waiver proposal (for the purposes
of Note 1 of the Notes on Dispensations from Rule 9 of the Code) or a reverse
takeover.

Checkit reserves the right to reduce the Possible Offer consideration by the
amount of any dividend (or other distribution) which is paid or becomes
payable by Crimson Tide to its shareholders following the date of this
announcement.

In accordance with Rule 2.6(a) of the Code, Checkit is required, by no later
than 5.00 p.m. on 2 July 2024, being 28 days after today's date, to either
announce a firm intention that it will make an offer for Crimson Tide plc in
accordance with Rule 2.7 of the Code or announce that it does not intend to
make an offer, in which case the announcement will be treated as a statement
to which Rule 2.8 of the Code applies. This deadline will only be extended
with the consent of the Panel on Takeovers and Mergers and Crimson Tide in
accordance with Rule 2.6(c) of the Code.

About Crimson Tide

Crimson Tide is the provider of mpro5, the process management app. mpro5 is
delivered on all modern devices and enables organisations to digitally
transform their business and strengthen their workforce by smart mobile
working. mpro5 is hosted in the cloud on Microsoft Azure. Crimson Tide's
contracts are provided on a long term, contracted subscription basis and
clients can immediately experience a return on their investment.

About Checkit

Checkit is the augmented workflow solution for frontline workers and smart
sensor automation, enabling large multinational and complex organisations to
operate more safely, efficiently and sustainably - driving them towards
achieving intelligent operations.

Checkit has hundreds of customers across the globe, including Global Fortune
500 and public health organisations. Checkit's customers are digitising their
manual processes through Checkit's highly customisable workflow software and
top-of-the-line Internet of Things (IoT) sensors, increasingly aided by
Machine Learning and AI. More than 12 billion sensor readings and millions of
completed workflows per year are sent through Checkit's platform enabling
customers to become more efficient, ensure safety and deliver complete
operational visibility.

Checkit will make further announcements in due course.

The individual responsible for releasing this announcement is Kit Kyte, Chief
Executive Officer of Checkit.

Enquiries:

 Checkit plc                                                +44 (0) 1223 643313
 www.checkit.net
 Kit Kyte (Chief Executive Officer)
 Greg Price (Chief Financial and Operations Officer)

 Singer Capital Markets (Nominated Adviser & Broker)        +44 (0) 20 7496 3000
 Shaun Dobson / Peter Steel / James Fischer

 Tavistock (Financial PR)                                   +44 (0) 20 7920 3150
 Lulu Bridges / Simon Hudson / Katie Hopkins                Checkit@tavistock.co.uk

 Yellowstone Advisory (Investor Relations)                  +44 (0) 203 951 8907
 Alex Schlich                                               alex@yellowstoneadvisory.com

 

 

Important Information

Singer Capital Markets Advisory LLP, which is authorised and regulated in the
United Kingdom by the Financial Conduct Authority, is acting exclusively for
Checkit and no-one else in connection with the Possible Offer and will not be
responsible to anyone other than Checkit or providing the protections afforded
to clients of Checkit or for providing advice in relation to the Possible
Offer or any other matter referred to in this announcement.

This announcement is not intended to, and does not, constitute or form part of
any offer, invitation or the solicitation of an offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of, any securities, or the
solicitation of any vote or approval in any jurisdiction, pursuant to this
announcement or otherwise. Any offer, if made, will be made solely by certain
offer documentation which will contain the full terms and conditions of any
offer, including details of how it may be accepted. The release, distribution
or publication of this announcement in jurisdictions other than the United
Kingdom and the availability of any offer to shareholders of Crimson Tide who
are not resident in the United Kingdom may be affected by the laws of relevant
jurisdictions. Therefore any persons who are subject to the laws of any
jurisdiction other than the United Kingdom or shareholders of Crimson Tide who
are not resident in the United Kingdom should inform themselves about and
observe any applicable requirements.

Rule 2.9

 

Pursuant to Rule 2.9 of the Code, the Company confirms that it has 108,008,562
ordinary shares of 5 pence in issue with International Securities
Identification Number GB00B0C5RG72.

Disclosure requirements of the Code:

 

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of
any class of relevant securities of an offeree or of any securities exchange
offeror (being any offeror other than an offeror in respect of which it has
been announced that its offer is, or is likely to be, solely in cash) must
make an Opening Position Disclosure following the commencement of the offer
period and, if later, following the announcement in which any securities
exchange offeror is first identified. An Opening Position Disclosure must
contain details of the person's interests and short positions in, and rights
to subscribe for, any relevant securities of each of (i) the offeree company
and (ii) any securities exchange offeror(s). An Opening Position Disclosure by
a person to whom Rule 8.3(a) applies must be made by no later than 3.30 p.m.
(London time) on the 10th business day following the commencement of the offer
period and, if appropriate, by no later than 3.30 p.m. (London time) on the
10th business day following the announcement in which any securities exchange
offeror is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead make a
Dealing Disclosure.

 

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1%
or more of any class of relevant securities of the offeree company or of any
securities exchange offeror must make a Dealing Disclosure if the person deals
in any relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the dealing
concerned and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree company and
(ii) any securities exchange offeror(s), save to the extent that these details
have previously been disclosed under Rule 8. A Dealing Disclosure by a person
to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London
time) on the business day following the date of the relevant dealing.

 

If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3.

 

Opening Position Disclosures must also be made by Crimson Tide and by any
offeror and Dealing Disclosures must also be made by Crimson Tide, by any
offeror and by any persons acting in concert with any of them (see Rules 8.1,
8.2 and 8.4).

 

Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Takeover Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror was
first identified. You should contact the Panel's Market Surveillance Unit on
+44 (0)20 7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure.

 

The defined terms used in this section "Disclosure requirements of the Code"
are defined in the Code which can be found on the Takeover Panel's website.

 

Publication on a website

 

In accordance with Rule 26.1 of the Code, a copy of this announcement will be
made available (subject to certain restrictions relating to persons resident
in restricted jurisdictions) on Checkit's website at www.checkit.net by no
later than 12 noon (London time) on the business day following the date of
this announcement. For the avoidance of doubt, the content of the website
referred to in this announcement is not incorporated into and does not form
part of this announcement.

 

Forward Looking Statements

 

This announcement may contain "forward-looking statements" relating to each of
Checkit, Crimson Tide and/or the Enlarged Group and the business sectors in
which they operate. Generally, the words "will", "may", "should", "continue",
"believes", "expects", "intends", "anticipates", "forecast", "plan" and
"project" or similar expressions identify forward-looking statements. Such
statements reflect Checkit's current views with respect to future events and
are subject to risks, assumptions and uncertainties that could cause the
actual results to differ materially from those expressed or implied in the
forward-looking statements. Many of these risks, assumptions and uncertainties
relate to factors that are beyond Checkit's abilities to control or estimate
precisely, such as future market conditions, changes in general economic and
business conditions and the behaviour of other market participants. Checkit
cannot give any assurance that the forward-looking statements will prove to
have been correct. The reader should not, therefore, place undue reliance on
these forward-looking statements, which speak only as of the date of this
announcement. Checkit does not undertake any obligation to update or revise
publicly any of the forward-looking statements set out in this announcement,
whether as a result of new information, future events or otherwise, except to
the extent legally required.

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