Checkit proposes merger with rival Crimson Tide

As per Checkit's £12.0m offer, Crimson Tide shares will be valued at 182.0p each, representing a 12% premium to its middle market closing price on 3 June. As a result of the deal, a single share Crimson Tide share will convert to seven Checkitt shares.

The AIM-listed group stated it had identified "significant potential revenue and cost synergies" stemming from the proposed merger with Crimson Tide, which could result in the enlarged company attracting a wider pool of investors and consequently being attributed higher valuation multiples by the market. Checkit also believes enhanced product offerings may present multiple opportunities for cross-selling and upselling.

Checkit chief executive Kit Kyte said: "The Checkit board has long believed that the combination of Checkit and Crimson Tide is an obvious and positive strategic step for both companies.

"We believe it will position the enlarged entity as a market leader in workflow software solutions, leveraging the strengths of both organisations for enhanced profitability."

As of 0925 BST, Crimson Tide shares had surged 10.55% to 179.0p, while Checkit shares were down 7.31% at 24.10p.

Reporting by Iain Gilbert at Sharecast.com