³ÉÈËÓ°Òô

On 9 December 2022, Crestchic plc (Crestchic) and private equity-backed, Aggreko Limited (Aggreko), that they have reached an agreement on the terms and conditions of a recommended cash acquisition of the entire issued and to be issued ordinary share capital of Crestchic by Aggreko. 

Crestchic, a fast-growing business that provides specialist power reliability equipment that are used in the maintenance of independent off-grid power sources, issued three earnings upgrades this year after enjoying a record level of sales. Crestchic owes its success to increased demand driven by high levels of data centre activity globally and higher than expected demand from the oil and gas sector, predominantly in the Middle East and Asia, as national energy policies changed tack in response to geopolitical uncertainty and the surge in fossil fuel prices.

Analysts took note of the company’s success and increased their 2022 and 2023 pre-tax profit estimates by 38% since a material proportion of the sales secured in H2 2022 will continue into Q1 2023. Following its third profit upgrade in August 2022, analysts also flagged Crestchic as a likely takeover target given its recent boom in demand, the geographic spread of its business, allowing the company to benefit from sales overseas and its high return on capital employed.

The offer by Aggreko, which values Crestchic at £122m, represents a premium of 13% to the company’s closing share price on 8 December 2022 (the last business day before the commencement of the offer period). Under the terms of the agreement, shareholders will receive £4.01 per share which the Crestchic directors have determined to be a fair and reasonable. Aggreko’s offer has received the unanimous recommendation of the board and irrevocable undertakings to back the offer from 31% of shareholders.

Commenting on the offer, Peter Harris, Executive Chairman of Crestchic, :

‘The Crestchic Board is pleased with the considerable progress made by the Company following the implementation and delivery of its refocused strategy, and believes that Crestchic has the potential to generate significant value for shareholders in the long-term. However, the Board recognises that Crestchic, as a relatively small business, could accelerate its growth and shareholder value creation by combining with a significantly larger player in related global markets. The Offer of 401 pence per Crestchic share in cash represents an attractive, immediate premium for shareholders, and I am confident that under Aggreko's responsible long-term stewardship the business will continue to thrive.’

Former FTSE 100 giant Aggreko was listed on the London Stock Exchange from 2006 until 2021 when it accepted a £2.3bn from a consortium comprising private equity buyers TDR Capital and I Squared Capital. Now on the buy-side and with the benefit of private equity dry powder, Aggreko has returned to raid the UK public market with its sights set on AIM-listed Crestchic.

Mike Smith, Chairman of Aggreko : 

‘Crestchic is a world-class business operating in an attractive and specialised area of the power reliability market. In Aggreko, Crestchic will have a supportive and well-capitalised owner who shares Crestchic's desire to execute against its long-term vision of providing solutions aligned with the changing requirements of our customers. We look forward to Crestchic becoming part of the Aggreko Group to provide the best platform for success for Crestchic's customers, employees and wider stakeholders’

Investors reacted positively to the news of the offer as Crestchic’s share price jumped 12% to £3.98 on 9 December 2022 and has continued to hold steady.  

Market Tracker will continue to monitor the transaction as it develops and further analysis on takeover transactions throughout the year will be featured in our upcoming 2022 Public M&A Trend Report.