Intelligent operations platform provider Checkit (CKT) said it has approached Crimson Tide (TIDE) , the provider of the mpro5 process management app, regarding a possible all-share offer for TIDE.
The deal would see Checkit acquire the entire issued share capital of Crimson Tide. Under the terms of the possible offer, each TIDE shareholder would receive 7 CKT shares. Based on CKT's last closing price, the offer values TIDE shares at 182p and its entire share capital at c. £12m. This represents a c. 12% premium to TIDE's last closing price, and TIDE shares gained c. 10% on the news. Should the deal go through, TIDE shareholders would own c. 30% of the enlarged group.
Checkit's rationale for the offer is to scale up its workflow and attract a wider investor base, in turn leading to increased liquidity and higher valuation multiples. The merged entity is expected to yield revenue and cost efficiencies, and offer an enhanced product suite to benefit both companies' existing customers. Additionally, Checkit expects substantial cross-selling and upselling opportunities.
The enlarged company would also benefit from Checkit's R&D platform and go-to-market experience. Checkit's expertise in IoT sensors should be especially beneficial to TIDE as the latter has sought to expand in this area. The merger would also facilitate TIDE's expansion in the US where Checkit is already well-established.
View from Vox
An exciting merger opportunity for both Checkit and Tide investors, expected to yield significant revenue growth within existing and new customers, as well as more effective product development and geographic expansion. Checkit has been looking into the acquisition for several years, with private negotiations failing to yield an agreement. CKT management therefore made the decision to announce its offer today in hope of engaging TIDE and CKT shareholders. Markets reacted accordingly with price movements of both companies reflecting the abovementioned terms.
There is good reason to believe Checkit will be successful in acquiring TIDE, as the deal offers significant benefits to investors of both companies, and would likely result in better long-term financial performance for the enlarged entity given the synergy of their products and teams. Moreover, Checkit already has a good track record of successfully integrating companies. More announcements and price movements are likely in the coming weeks.
In its most recent full-year results for FY24, Checkit announced significant progress toward profitability, now expected in 2026. Checkit halved losses and increased recurring revenues and margins substantially during the period, with momentum continuing in FY25 after ARR increased for a 4th consecutive year, and with a retention rate of 111% providing strong visibility.
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