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Times
a day ago
- Business
- Times
Is this a good time to buy shares in Craneware?
American bidders have been buying up UK public companies over the past few years and the generous premiums on offer have called into question the valuations awarded to companies listed in London. The transatlantic interlopers may have succeeded with a number of targets but the founder of Craneware has stood firm in the face of an offer from the giant private equity firm Bain Capital. Craneware is a supplier of financial software to America's hospitals that was founded by Keith Neilson and Gordon Craig in 1999. It floated on the London Stock Exchange at 142p per share almost two decades ago, and its market capitalisation has steadily grown with shares now trading at around 222p. Its customer base now spans more than 12,000 hospitals, pharmacies and clinics, with a dataset encompassing more than 200 million encounters with patients in the US healthcare system. Neilsen, who is currently chief executive and remains a top shareholder in the group, was applauded by analysts last month for turning down the Bain bid that would have made him a fortune. The £26.50-a-share offer would have landed him a payout worth more than £80 million. Panmure Liberum, the City firm, said this showed his 'strong indication of confidence in the business'. The rejection was all the more notable given the number of American bids for other British technology companies taking place in the same week, as offers rained in for Spectris, Alphawave and Oxford Ionics. Investors will have a better idea of why Neilson is feeling confident about the business in the coming days when the company releases a full-year trading update. Craneware had already thrown some light on its performance when it showed Bain the door, saying trading had been strong, with continued growth in revenues and earnings. The board will have had a fairly clear idea of its annual performance by this point in its financial calendar. Revenues in the first half were up 10 per cent and analysts at Panmure Liberum are expecting revenues in the second half to grow by 6.6 per cent. Yet the analysts have stated that the market Craneware is operating in is delivering double-digit growth, and said the company may therefore be giving conservative guidance, given that its main product has a leading position. Craneware's clients number about 40 per cent of the registered hospitals in America, and the company states that it saves customers $1.5 billion every year, suggesting it will benefit from the increasing focus on cost-saving in the US healthcare system. Craneware's shares have appreciated significantly since the Bain bid, but they remain below Bain's bid price. Analysts who cover the company have set target prices ranging between 260p and 300p. So who is right? Neilsen, Bain and the analysts — or the wider market? Recent bidding wars for UK-listed companies seem to be demonstrating that the market is getting it wrong. Spectris, the instrumentation and testing specialist, has attracted a £40-a-share cash offer from KKR, representing a premium of 96 per cent, with some City analysts speculating that it could be subject to an even higher offer. Graham Simpson, director of Canaccord Genuity's Quest team, reckons the big institutional investors may not be fully educated on the workings of their investee companies, and fail to appreciate operational nuances that can be highly valuable to private equity firms or bidders working in the same sector. Craneware has so far attracted a private equity bid, but there could be room for a large US trade buyer to enter the ring. DS Smith, Wincanton, Assura and others have been subject to bidding wars involving American suitors, and Craneware could be an even more attractive bid target, given the size of its market share in the US, and the fact that all of its revenues are generated there. Bain, analysts and the company may therefore be right to bet against the market with their appraisals of Craneware's value and, if so, investors will see some appreciation if they buy in now. Advice: BuyWhy: American bid interest hints at more value in the shares
The Herald Scotland
16-07-2025
- Business
- The Herald Scotland
Edinburgh firm beats forecasts after snubbing US approach
The update could be seen as vindication of the company's decision to resist the approach from Bain, which it said 'fundamentally' undervalued Craneware and its prospects and focus on a strategy that it argued would 'create significant value for shareholders'. Craneware's software is used in about 2,000 hospitals across the US, giving it an approximately 40% share of that market. Its products are used by around a further 10,000 clinics and affiliate retail pharmacies. The company told the market today that it 'experienced positive trading throughout the fiscal year, delivering continued strong growth, and profitability ahead of consensus market expectations'. Annual recurring revenue increased by 7% to $184 million amid 'continued sales momentum' and the company stated that it continued to 'deliver high levels of operating cash conversion, which have been used to invest in the product portfolio, reduce debt, and interest costs'. Total bank debt was reduced to $27.7m from $35.4m, while cash reserves stood at $55.9m by year-end, up from $34.6m last year. Scots firms 'still on a knife-edge' despite fall in administrations Former Rangers chief bidding to 'reset' renowned Scottish retailer 'We believe in Glasgow': Developer gives city huge vote of confidence And the company underlined its confidence of achieving further growth, declaring that it 'anticipates that the ongoing drive within US healthcare to improve efficiency and deliver value in healthcare will continue to provide a positive market environment for Craneware's offerings'. Craneware added: 'The partnership with Microsoft is progressing well, raising the profile of The Craneware Group and its AI-powered Trisus offerings with hospital CIOs (chief information officers) across the US, providing the basis for increased market penetration in future periods. AI development in conjunction with Microsoft continues as planned.' Chief executive Keith Neilson said in a statement to the stock market: 'We are pleased to see our growth rates accelerating and profitability exceed expectations, with this year's performance supporting a move to sustainable, double-digit growth. 'Our extensive data sets and the powerful insights we can provide via our Trisus platform give our customers the means they need to improve their operational and financial performance. We have a unique capability to support our customers in their missions, and are seeing this translate into continued strong expansion sales within our customer base and a significant and growing base of recurring SaaS (software as a service) revenues. 'With continued strong cash generation, and a strategic position as a source of independent data and insights at the heart of the US healthcare market, we are excited by the opportunity ahead, for us and our customers, and look to the future with confidence.' Headquartered in Edinburgh, Craneware has about 200 employees in the UK made up mainly of product developers and engineers. The company employs roughly another 600 people in the US following the £283m acquisition of Florida-based Sentry in 2021. Shares in the company closed up 10.44%, or 235p, at 2,480p.
The Herald Scotland
11-06-2025
- Business
- The Herald Scotland
Edinburgh firm Craneware rejects £1bn takeover approach
The board of the Scottish company, led by long-standing chief executive Keith Neilson, said it believes the proposal 'fundamentally undervalues Craneware and its prospects'. Craneware declared in the statement: 'The proposal was received without the parties entering into a due diligence process. 'The board is fully confident in the ongoing execution of Craneware's strategy and that its continued successful delivery will create significant value for shareholders. The board believes that the proposal received from Bain is not in the best interest of shareholders and is not consistent with the board's understanding of the objectives of shareholders. Read more: 'The board believes the company's share price performance over the last 12 months is not reflective of the company's trading performance and the continued improving prospects of the business, instead reflecting non-Craneware specific market factors. 'The board confirms trading in the year to 30 June 2025 has been strong, with continued growth in revenue and adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation), and further earnings, ARR (annual recurring revenue) and NRR (net revenue retention) acceleration.' Boston-based Bain said in its own statement to the stock market that it 'does not intend to make an offer for Craneware'. Craneware emerged as a bid target for Bain on May 16, when the American investment outfit declared that it was 'assessing a possible offer' for the company. At the time, Bain was given until no later than 5pm on June 13 to announce a firm intention to make an offer or walk away. Craneware designs and sells software to help improve the financial efficiency of the healthcare sector, with a focus on the US market. It reported record figures for the first half of its financial year in March, when Mr Keith Neilson declared he was 'very positive' about its prospects despite the political upheaval following the return of Donald Trump to the White House. Mr Neilson said at the time that the company's tools for improving efficiency in the healthcare sector were driving sales as hospitals refocused on "fundamentals" following the US presidential election. Panmure Liberum said in a note for investors today: 'The 7.00am RNS that confirmed Bain were not going to make an offer was far less interesting than the 7.49am RNS from Craneware. Our initial thoughts focused on the highly preliminary nature of the May announcement, at that stage Bain had not even been in contact with the Board of Craneware. 'However, the later release today confirms that the Board had in fact rejected a 2,650p proposal. The board clearly believes the business fundamentals are improving, and the founder/CEO is the 2nd biggest shareholder. This is supported by the company confirming that revenue has continued to grow and earnings, ARR and NRR have accelerated further. We continue to see the company as a bid target despite today's news and retain our buy rating and 2,750p target price.' Shares in Craneware closed…
