Harrogate’s Redcentric starts formal sale process

Harrogate-based IT firm Redcentric Plc confirmed on Wednesday it “has initiated limited discussions with third parties with a view to seeking a potential purchaser or purchasers for the company.”

Redcentric, which has a stock market value of around £220 million, said it is currently “in discussions with Macquarie Principal Finance Pty Limited, UK Branch and Six Degrees Holdings Limited.”

Redcentric shares have soared about 80% over the past 12 months.

The Harrogate firm said that following media speculation, and as part of a broader strategic review, “Redcentric is announcing a formal sale process as set out in Note 2 of Rule 2.6 of the Code that could result in a sale of the company.”

Redcentric said: “Whilst a potential offer for the company may be the outcome of a formal sale process, the company is alternatively evaluating potential options in relation to organic growth and/or potential acquisitions that might be made by the company …

“The board currently expects the formal sale process to conclude during the fourth quarter of 2020.

“The company confirms that it is currently in discussions with Macquarie Principal Finance Pty Limited, UK Branch and Six Degrees Holdings Limited.

“It should be noted that, as at the date of this announcement, the company has not received any form of approach or indicative proposal to acquire the company, either pursuant to the company-initiated discussions or otherwise.

“There can be no certainty that any offer will be made for the company, nor that any transaction will be executed, nor as to terms of any such offer or transaction. 

“The board reserves the right to alter any aspect of the formal sales process or to terminate it at any time and will make further announcements as appropriate.

“The board reserves the right to reject any approach or terminate discussions with any interested party or participant at any time.

“Following this announcement, the company is now considered to be in an ‘offer period’ as defined in the code, and the dealing disclosure requirements listed below will apply.

“Stifel is acting as sole financial adviser in relation to the code.”

On July 21, Redcentric said its revenue fell 6% to £87.5 million for the year ended March 31, 2020, but that trading in the first quarter of the current financial year “has been strong and slightly ahead of the board’s full year expectations.”

Full-year dividend per share was up 31% to 1.83p despite a reported loss before tax of £10.6 million which included a one-off provision of £11.4 million to cover a restitution scheme as part of a settlement reached with the FCA.

In June, Redcentric announced it reached a settlement with the FCA “in relation to certain historical accounting misstatements.”

Also in June, Redcentric announced a share placing and subscription to raise £5.775 million.