RECOMMENDED CASH ACQUISITION
of
RENOLD PLC
(“RENOLD”)
by
MPE Bid Co (“Bidco”) a newly-formed corporation indirectly controlled by funds managed by MPE Mgt. Co., LLC
to be effected by means of a Scheme of Arrangement under Part 26 of the Companies Act 2006
Summary
- The boards of Bidco and Renold are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition of the entire issued and to be issued ordinary share capital of Renold by Bidco.
- Under the terms of the Acquisition, each Renold Shareholder will be entitled to receive:
for each Renold Ordinary Share: 82 pence in cash
- The Acquisition Price values the entire issued and to be issued ordinary share capital of Renold at approximately £186.7 million on a fully diluted basis and the Acquisition Price represents a premium of approximately:
- 50 per cent. to the Closing Price per Renold Ordinary Share of 54.6 pence on 19 May 2025, being the last Business Day prior to the commencement of the Offer Period on 20 May 2025;
- 96 per cent. to the volume weighted average price per Renold Ordinary Share of 41.9 pence for the three-month period ended on 19 May 2025; and
- 85 per cent. to the volume weighted average price per Renold Ordinary Share of 44.2 pence for the six-month period ended on 19 May 2025.
- The Acquisition is intended to be effected by means of a scheme of arrangement under Part 26 of the Companies Act (the “Scheme“) or, if Bidco elects, with the consent of the Panel and subject to the terms of the Cooperation Agreement, by way of a Takeover Offer.
- If any dividend and/or other distribution and/or other return of capital is authorised, declared, made or paid or becomes payable in respect of Renold Ordinary Shares on or after the date of this Announcement, Bidco reserves the right to reduce the Acquisition Price by the aggregate amount of such dividend and/or other distribution and/or other return of capital.
- The Acquisition relates only to the Renold Ordinary Shares and does not extend to the Renold Preference Shares, which are intended to be separately repaid following a reduction of share capital.
Background to, and reasons for, the Acquisition
- MPE believes the Acquisition of Renold by Bidco to sit alongside Webster Industries, Inc. (“Webster“), a portfolio company within its industrial platform, represents a strategic step forward in Webster’s long-term vision to build a global leader in automation, material handling, and power transmission solutions.
- MPE views Renold as a high-quality, resilient business with a strong reputation in its markets, a diversified customer base, and a global manufacturing footprint. Renold’s broad portfolio of applications and engineering capabilities make it a natural fit with Webster, an innovative, U.S.-based leader in the design, manufacture, and distribution of engineered conveying, feeding, separation, screening, and steel levelling solutions.
- The Acquisition is underpinned by a compelling strategic rationale, including:
- Repositioning Webster as a Global Industrial Chain and Sprocket Group: The combination of Webster and Renold brings to Webster an established global platform with premium brands and an expanded product offering, enabling the group to serve a broader range of industrial automation, material handling, and power transmission needs across multiple sectors
- Enhanced Geographic and End-Market Diversification: Renold’s international presence and customer reach will complement Webster’s strong U.S. footprint, reducing Webster’s geographic concentration and increasing exposure to high-growth end markets
- Cross-Selling and Operational Collaboration: The integration of Renold and Webster will unlock opportunities for cross-selling across complementary customer bases, while fostering collaboration to adopt and scale industry best practices across both organisations
- Procurement and Operational Synergies: The combined scale of the two businesses will enable more efficient procurement, streamlined operations, and improved supply chain integration, driving cost efficiencies and margin enhancement
- MPE believes that Renold, under private ownership and when combined with Webster, will benefit from a broader long-term strategic focus and an optimised capital structure. MPE is committed to supporting Renold’s management team in accelerating the Company’s growth trajectory, investing in innovation, and unlocking its full potential.
Background to, and reasons for, the Renold Directors’ recommendation
- Renold is a leading designer, engineer, manufacturer and supplier of premium, high specification industrial chain and torque transmission products. With manufacturing facilities located across Europe, North America and Asia, the Renold Group supplies a large number of international customers, across a broad range of industrial power transmission markets.
- Having generated significant operational and financial improvements in the organisation through its “STEP2020” strategy between 2015 and 2020, Renold launched its “STEP 2 Growth” strategy in 2022, with an objective of achieving sustained, profitable growth through a combination of organic revenue growth, value-enhancing acquisitions and business improvement. Successful delivery of STEP 2 Growth strategic objectives has seen revenue increase from £165.3 million in FY2021, to £241.4 million in FY2024, and adjusted operating profit from £11.4 million to £29.7 million, with margins increasing by 5.40%, over this period. Delivery against strategic priorities during FY2025 has yielded further encouraging progress and, as a result, the Renold Directors remain confident that the STEP 2 Growth strategy will create significant value, over the long-term.
- Notwithstanding the strategic and financial progress achieved, the Renold Directors believe that the long-term potential of the Renold Group, as a market leading growth business in a fragmented industry, has not been adequately reflected in the price and valuation rating of the Renold Ordinary Shares, which have fluctuated significantly in the past twelve months. Investor sentiment in the public markets, particularly towards UK smaller companies, remains subdued and, when set against the current elevated level of geopolitical and macroeconomic volatility, the Renold Directors consider that potential for a sustained, material improvement in the valuation of Renold’s Ordinary Shares in the near term is likely to be limited. In addition to affecting the price of the Renold Ordinary Shares, this would also adversely impact its ability to access capital and drive further growth whilst remaining as a quoted company.
- The Renold Directors believe that the Renold Group’s ability to access growth capital through public markets is uncertain and that the Acquisition may provide the Renold Group with improved access to flexible capital, enabling the removal of public company costs and, along with additional insight and support which Webster brings, give it the best chance to achieve its STEP 2 Growth objectives faster and more sustainably than Renold would be able to achieve alone as a listed entity.
- The Acquisition Price of 82 pence per Renold Ordinary Share proposed by Bidco followed a number of unsolicited proposals from Bidco and represents a significant increase from the initial proposal. The Renold Board believes that the terms of the Acquisition provide the opportunity for Renold Shareholders to realise an immediate and certain cash value today for the entirety of their investment at a level which may not be achievable until the execution of Renold’s strategy is delivered over the medium to longer term, with that execution subject to a number of factors outside of Renold’s control. The Acquisition Price also represents a price level significantly in excess of the highest price at which Renold Ordinary Shares have traded over the five years prior to 19 May 2025, being the last Business Day prior to the commencement of the Offer Period.
- In considering the financial terms of the Acquisition and determining whether they reflect an appropriate valuation of Renold and its future prospects, the Renold Board has taken into account a number of factors including that:
- the Acquisition would provide an opportunity for Renold Shareholders to realise immediate value from delivery of the standalone strategy on an accelerated basis, in cash;
- the certainty of the Acquisition should be weighed against the inherent uncertainty of the delivery of future value that exists in the business; and
- at 82 pence per Renold Ordinary Share the Acquisition Price represents an attractive premium of approximately:
- 50 per cent. to the Closing Price per Renold Ordinary Share of 54.6 pence on 19 May 2025; and
- 96 per cent. to the volume weighted average price per Renold Ordinary Share of 41.9 pence for the three-month period ended on 19 May 2025.
- In addition to the financial terms, the Renold Directors have also taken into account Bidco’s intentions concerning Renold’s business, management team, employees and other stakeholders of the Company (detailed in paragraph 9 below). The Renold Board notes the importance Bidco attaches to the skill and experience of Renold’s management and employees who will continue to be key to the success of Renold.
Accordingly, following careful consideration of the above factors the Renold Directors intend to recommend unanimously that Renold Shareholders vote in favour of the Scheme at the Court Meeting and that Renold Shareholders vote in favour of the resolutions to be proposed at the General Meeting.
Renold Directors’ recommendation
- The Renold Directors, who have been so advised by Peel Hunt as to the financial terms of the Acquisition, unanimously consider the terms of the Acquisition to be fair and reasonable. In providing its advice to the Renold Directors, Peel Hunt has taken into account the commercial assessments of the Renold Directors. Peel Hunt is providing independent financial advice to the Renold Directors for the purpose of Rule 3 of the Takeover Code.
- Accordingly, the Renold Directors intend unanimously to recommend that Renold Shareholders vote, or procure the vote, in favour of the Scheme at the Court Meeting and the Special Resolution as the Renold Directors have irrevocably undertaken to do in respect of their own beneficial holdings in respect of which they control the voting rights.
Irrevocable undertakings
- Bidco has received irrevocable undertakings from each of the Renold Directors to vote, or procure the vote, in favour of the Scheme at the Court Meeting, the Special Resolution and the Preference Share Repayment Resolution in respect of their own beneficial holdings in respect of which they control the voting rights amounting, in aggregate, to 6,008,539 Renold Ordinary Shares, and representing approximately 2.7 per cent. of Renold’s issued ordinary share capital at close of business on the Latest Practicable Date (or, if the Acquisition is implemented by way of a Takeover Offer to accept or procure acceptance of the Takeover Offer).
- The irrevocable undertakings remain binding even in the event of a competing offer for Renold at a price higher than the Acquisition Price.
- Further details of these irrevocable undertakings are set out in Appendix III to this Announcement.
Timetable and Conditions
- The Acquisition will be put to Renold Shareholders at the Court Meeting and at the General Meeting. In order to become Effective, the Scheme must be approved by a majority in number of the Scheme Shareholders voting at the Court Meeting, either in person or by proxy, representing at least 75 per cent. in value of the Scheme Shares voted. In addition, a special resolution implementing the Scheme and approving certain other matters must be passed by Renold Shareholders representing at least 75 per cent. of votes cast at the General Meeting.
- The Acquisition is subject to the further conditions and terms set out in Appendix I to this Announcement. It is expected that, subject to the satisfaction or waiver of all such conditions, the Scheme will become Effective during the final quarter of 2025.
- The Scheme Document, containing further information about the Acquisition, and notices of the Court Meeting and the General Meeting and the expected timetable of the Scheme, together with the Forms of Proxy, will be published as soon as practicable but in any event (save with the consent of the Panel) within 28 days of this Announcement and will be made available by Renold at https://investors.renold.com/possible-offer and Webster at https://www.websterchain.com/possible-offer-for-renold/.
Commenting on the Acquisition, Constantine Elefter, Partner at MPE said:
“We are extremely excited about the opportunity to partner with Renold, which we view as highly complementary to Webster. We believe the combination represents a compelling opportunity to significantly enhance the combined capabilities and opportunities for both companies, bringing together recognized industry brands and creating one of the leading players within the premium industrial chain industry. Both companies share a deep commitment to product quality, engineering innovation and customer service and we look forward to collaborating closely with Renold’s talented team to drive further growth and innovation, building on the strong foundation they have established.”
Commenting on the Acquisition, David Landless, Chairman of Renold said:
“Renold is a leading designer, engineer, manufacturer and supplier of premium, high specification industrial chain and torque transmission products with a large number of international customers, across a broad range of industrial power transmission and conveyor system markets. The Renold Board believes that the offer not only represents a significant premium and provides shareholders with the certainty of a cash consideration but also provides an opportunity to deliver on our strategy more quickly.
On behalf of the Renold Board, I would like to acknowledge the invaluable contribution from all of our colleagues throughout Renold to the development and success of the business and I offer my sincere thanks and appreciation for their ongoing commitment to delivery of our strategic objectives.”