Redcentric (AIM:RCN), a UK IT managed services provider, is proposing a tender offer of up to £90 million to return capital to shareholders following the May completion of its Data Centre Business sale, which generated an initial payment of £115.4 million with approximately £7.4 million of remaining consideration expected by 31 July.
The tender price of £1.60 per share represents a premium of approximately 30.9% to the pre-announcement closing price, and up to 56.25 million shares, equivalent to 35.3% of the issued share capital, can be tendered under the offer.
The board priced the offer using what it describes as cautious earnings multiples applied to the remaining MSP business, which generated unaudited adjusted EBITDA of approximately £17.5 million on revenues of approximately £132.1 million for the year ended 31 March, with around 88% of revenue recurring and gross margins of approximately 61%.
Shareholders will also vote on a share capital restructure involving a 20-for-1 consolidation followed by a 1-for-20 subdivision, designed to eliminate shareholders holding fewer than 20 shares and reduce the shareholder register from approximately 8,000 to approximately 900, cutting ongoing administrative costs.
