Eleco shares soared on Thursday after agreeing to a bumper £207.6m cash takeover by US private equity firm Accel-KKR.
Under the recommended offer, shareholders in the construction software company will receive 235p in cash per share, a 75% premium to the 134.5p at which it closed before the offer, and around 90% above the average over the previous six months.
The offer values Eleco at about 20 times its 2025 earnings – a valuation it would struggle to achieve on the UK’s public markets.
Eleco, which is quoted on AIM, has transformed itself over the past two decades from a building products manufacturer into a provider of software for the construction and built-environment sector, with products spanning project management and scheduling. It has shifted to a subscription model, growing annual recurring revenue to a record £35.5m by mid-2026, with organic revenue up 15% in the first half.
The board unanimously recommended the offer, which isn’t a surprise given the bumper premium. Eleco shares were trading at a little over 100p in April this year.
While it said Eleco could keep creating value on its own, it acknowledged the rising investment needed to keep pace in software — in cloud platforms, AI and go-to-market capabilities — and the execution risks involved, and noted the cash offer gave shareholders certainty and a chance to realise their holdings given the shares’ limited trading liquidity on AIM.
Investors representing about 45% of the company have already backed the deal.
Accel-KKR said it would support Eleco’s product development, its transition to software-as-a-service and its use of AI, and did not intend to make material job cuts.
Nonetheless, London loses another interesting firm.