A formal sale process begun at Gloucester-based engineering giant Renishaw after the two founders and largest shareholders announced they plan to sell their stake in the company.
Executive Chairman Sir David McMurtry and Non-Executive Deputy Chairman John Deer have today kickstarted plans to sell their combined 53% holding in the FTSE 250 company – something which could generate more than £2.6bn.
Renishaw’s shares surged more than 17% following the announcement, as the search for a suitor began.
A statement from Renishaw read: “The Board has unanimously concluded that it would be appropriate to investigate the sale of the Company and is therefore launching a formal sale process for the Company. The Board intends to seek a buyer who will respect the unique heritage and culture of the business, its commitment to the local communities in which its operations are based, and who will enable the
Company to continue to prosper in the long-term.”
Since its foundation in 1973, Renishaw has grown into one of the world’s leading engineering and scientific technology companies, with expertise in precision measurement and healthcare.
Sir David McMurtry, Executive Chairman of Renishaw, and John Deer, Non-Executive Deputy Chairman, commented: “We are both grateful for our continued good health, however we recognise that neither of us is getting any younger. Now finding ourselves in our 80s, our thoughts have increasingly turned to considering
the future of our shareholdings in the Company and how we can actively contribute to securing the future success of the business. With that in mind, we approached the rest of the Board to indicate that we felt the time was now right to discuss the best way to achieve this.
“As the founders of Renishaw, we understand the importance of Renishaw’s culture, our place in the communities in which we operate, our commitment to research and development, and the loyalty of our staff, our suppliers, and the customers we serve; these together have been the foundation of our success for almost 50 years. With the Board, we are therefore focused on ensuring that we find the right new owner for our business – one who respects and will continue to nurture these important attributes.”
UBS is acting as sole financial adviser and corporate broker to the Company in relation to the sale process.
Neither Renishaw nor its founders are currently in discussions with any potential offeror or in receipt of a possible offer for the company as at the date of this announcement.
A report from Hargreaves Lansdown gave the following assessment on the situation.
The sale boards have gone up at Renishaw and with a possible takeover now on the cards, the share price has surged by 17% in anticipation of an offer.
But finding a buyer for the precision engineering company might turn out to be a lengthy process. Renishaw has been a labour of love for the founders, Sir David McMurtry and John Deer who set up the company almost five decades ago and have seen it flourish into a global player. Now executive chair and non-executive deputy chair, between them they have a 53% holding in the FTSE 250 company.
They want to sell their stake, but don’t seem in a desperate rush and have indicated their focus will be on finding a new owner who fits their vision for the company while respecting its culture and heritage. Crucially it seems they want a buyer which commits to the communities in which it operates. It has manufacturing bases not just in Gloucestershire, where the company is headquartered, but also in Cardiff and York as well as plants in Ireland, India Germany and the USA.
But as we’ve seen in previous take overs in the past, pledges can be reneged on. When the US giant Kraft acquired of Cadbury’s in 2010, it retracted its promise to keep the chocolate factory in Keynsham near Bristol open, moving production to Poland.
Despite best intentions there is always a risk that could happen which is likely to mean there will be a highly concerted effort to find the right buyer at the right price.
Renishaw’s shares have already more than doubled in a year and any potential match will have to meet a pretty hefty price tag to scoop the deal.