Shares surged this morning at Gloucestershire’s greatest recent manufacturing success story, Renishaw, as it announced its intention to put itself up for sale following a decision by its now octogenarian founders, Sir David McMurtry and John Deer, Executive Chairman and Non-Executive Deputy Chairman, to dispose of their very substantial shareholdings in the company they founded 1973.
Together, the founders own approximately 53 per cent of the issued share capital of the Company.
Having considered the options, Renishaw’s Board unanimously decided to investigate the sale of the company and is therefore launching a formal sale process.
The Board says it intends to seek a buyer who will respect the unique heritage and culture of the business, its commitment to the local communities in which its operations are based, and who will enable the company to continue to prosper in the long-term.
Sir David McMurtry, Executive Chairman of Renishaw, and John Deer, Non-Executive Deputy Chairman, said: “We are both grateful for our continued good health, however we recognise that neither of us is getting any younger. Now finding ourselves in our 80s, our thoughts have increasingly turned to considering the future of our shareholdings in the company and how we can actively contribute to securing the future success of the business. With that in mind, we approached the rest of the Board to indicate that we felt the time was now right to discuss the best way to achieve this.
“As the founders of Renishaw, we understand the importance of Renishaw’s culture, our place in the communities in which we operate, our commitment to research and development, and the loyalty of our staff, our suppliers, and the customers we serve; these together have been the foundation of our success for almost 50 years. With the Board, we are therefore focused on ensuring that we find the right new owner for our business – one who respects and will continue to nurture these important attributes.“
Last month Renishaw reported £255.1 million in revenues for the six months ended 31 December 2020, down from £259.4 million for the corresponding period last year. However, it was its profitability which was the real star of this global manufacturer’s report. Adjusted profit before tax for the period was £43.4 million, up from £14.3 million in the first half of 2019, and statutory profit before tax of £63.9 million (up from £9.9 million in 2019).
Renishaw’s ‘Fit for the Future’ strategy has delivered improved productivity and significant reductions in the Group’s cost base. The strategy included a resizing of the business, restructure of its AM product line and a focus on prioritising design projects to accelerate the market launch of significant products. Employee headcount dropped at the end of December to 4,324, down from 4,463 at the end of June.
Since its foundation in 1973, Renishaw has grown into one of the world’s leading engineering and scientific technology companies, with expertise in precision measurement and healthcare. At the heart of everything is the company’s culture of innovation and a fundamental belief that success comes from patented and innovative products and processes, high quality manufacturing, and the ability to provide local customer support in all its markets around the globe. This has resulted in a long-term track record of strong operational and financial performance.
UBS is acting as sole financial adviser and corporate broker to the Company in relation to the sale process.
The company confirmed that neither it nor the founders are currently in discussions with any potential offeror or in receipt of a possible offer for the Company or for the shareholdings in the company of the founders.
Sir David Grant, Senior Independent Non-Executive Director at Renishaw, added: “David and John have been exceptional stewards and majority holders of Renishaw as evidenced by the company’s long-term track record of innovation, success and value creation.
“Following the indication from David and John that they would like to sell their shares, my fellow directors and I have thoroughly considered various alternatives in partnership with our advisers. In considering these options the Board, including David and John, has had regard to the interests of all the company’s stakeholders. The Board has unanimously concluded that it would be appropriate to investigate the sale of the Company and is therefore launching a formal sale process.
“The Board intends to seek a buyer who will recognise the value of Renishaw as an innovation-led business and respect the unique heritage and culture of the business, its commitment to the local communities in which its operations are based, and who will enable the Company to continue to prosper in the long-term.”
But Bristol-based financial services company Hargreaves Lansdown warns that despite the founders wish to find a buyer which will stay true to their commitment to its culture of innovation and investment, a suitor which pledges to do the right thing could renage on its promise. In a statement it said:
“As we’ve seen in previous take overs in the past, pledges can be reneged on. When the US giant Kraft acquired of Cadbury’s in 2010, it retracted its promise to keep the chocolate factory in Keynsham near Bristol open, moving production to Poland.
“Despite best intentions there is always a risk that could happen which is likely to mean there will be a highly concerted effort to find the right buyer at the right price.
“Renishaw’s shares have already more than doubled in a year and any potential match will have to meet a pretty hefty price tag to scoop the deal.’’
I first interviewed Sir David McMurtry in 2011. The headline for the interview was “Renishaw irreplaceable”. I hope that whoever buys this great company, respects and continues Sr David’s and John Deer’s legacy of innovation.
Born in Dublin, the young David loved engineering and went to work for Bristol Aero Engines (later to become Rolls Royce) at Filton. By the age of 24 he was a qualified engineer working in the company’s design office. Aged 30 he became the Deputy Chief Designer and worked on the RB199 and Tornado fighter engines. During this time a colleague came to him with a problem: They couldn’t make the fuel pipes for the Concorde engine because of limitations with the existing measurement devices.
That weekend he scratched his head and on Monday presented them with the solution, a touch trigger probe. 50 years later derivations of the original probe are still in production at Renishaw, generating revenue along with hundreds of other innovative products designed by the Renishaw team.
Sir David and his business partner John Deer established the company in 1973 and finally bought out Rolls-Royce’s interest in the original patents in 1987. Despite being over the age of retirement, Sir David continued to be the company’s chief designer. John was the man behind the manufacturing side of the business. Over the last four decades they have made an invincible team.