US private equity swoops for the construction software group at a 75% premium, ending its two-decade run as a listed AIM stock.
Eleco (AIM: ELCO) shares surged on Thursday after the construction software group agreed to a £207.6m recommended cash takeover by US private equity firm Accel-KKR, in one of the more eye-catching AIM exits of the year.
Under the terms of the deal, shareholders will receive 235p in cash for each Eleco share, a 75% premium to Wednesday's 134.5p closing price and roughly 90% above the average price over the previous six months, sending the stock sharply higher as the market moved to price in the offer.
The valuation puts Eleco at around 20 times its 2025 earnings, a multiple the company said it would likely struggle to command while listed on London's junior market. Eleco has spent the past two decades reinventing itself from a building products manufacturer into a software provider for the construction and built-environment sector, shifting to a subscription model that has pushed annual recurring revenue to a record £35.5m by mid-2026, with organic revenue growth of 15% in the first half.
The board unanimously recommended the offer, unsurprising given the scale of the premium on offer, with shareholders representing around 45% of the company already committing their support. The board noted that while Eleco could continue creating value independently, the rising cost of keeping pace in cloud, AI and go-to-market investment carried execution risk, and that the cash offer gave investors certainty and a route out of a stock with limited trading liquidity on AIM. Shares had been trading at a little over 100p as recently as April.
Accel-KKR has said it will back Eleco's product development, its continued shift to a software-as-a-service model and its use of AI, and does not intend to make material job cuts. The deal, subject to the usual approvals, marks another departure from London's small-cap market, continuing a trend of AIM-listed technology names being picked off by private equity buyers at premiums public markets have been unwilling to pay.
This report is based on Eleco’s announcement and coverage by UK Investor Magazine. Company announcements can be tracked via London Stock Exchange RNS and Investegate, and the full results calendar is worth watching for the next update.
This article is for general information only and does not constitute investment advice or a recommendation to buy or sell any security. Photo: Evgeniy Surzhan on Unsplash.
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