Charles Stanley’s Eleco Offer Letter Shares Fall to 3,976,416

Key Facts

Eleco disclosed on November 10 that the number of its shares covered by a non-binding letter of intent from Raymond James Wealth Management, known as Charles Stanley, had fallen to 3,976,416 shares, equivalent to about 4.7% of issued share capital. The letter covered 6,343,418 shares, or about 7.5%, when the takeover offer was announced on September 10. The update relates to one letter, while the total number of shares subject to irrevocable undertakings and non-binding letters of intent to vote in favor of the scheme stood at 37,750,529, or about 44.7% of the capital. Eleco reported these figures in a regulatory disclosure concerning Avocet Bidco’s recommended cash offer to acquire the company. The disclosure sets out the current level of support for the scheme vote, while Charles Stanley’s letter remains changeable by virtue of its non-binding nature.

The decline reflects a change in the shares covered by the letter, not an announced amendment to the takeover offer’s terms. The disclosure said Charles Stanley sold 5,510 shares on November 6 and also transferred 6,790 shares out of discretionary management, an action reported in a November 9 disclosure. These transactions are consistent with the reduction in shares covered by the letter from 6,343,418 to 3,976,416 by the November 10 update. The proportion represented by the letter therefore fell from about 7.5% to about 4.7% of issued share capital. The disclosure did not describe those movements as a withdrawal from the deal or a change in the board’s recommendation; it recorded the number of shares that remained covered by the letter of intent.

The disclosure expressly states that Charles Stanley is entitled to sell, buy or otherwise deal in Eleco shares at any time under the letter of intent. The letter therefore does not prevent trading in the shares, and the number covered reflects the holdings within its scope on the update date. This type of letter differs from the irrevocable undertakings included in the total support figure of 37,750,529 shares. The company’s disclosure combined irrevocable undertakings and non-binding letters of intent in one figure, putting their total at about 44.7% of issued share capital. This total gives a broader picture than the change in Charles Stanley’s letter alone, as it includes both categories.

The deal dates to a joint announcement by the boards of Avocet Bidco and Eleco on September 10 of a recommended cash offer to acquire the entire issued and issuable share capital of Eleco through a court-sanctioned scheme of arrangement. Upon completion, Bidco will be indirectly owned by funds managed or advised by Accel-KKR and its affiliates. Bidco is offering 235 pence in cash for each share, representing a premium of 74.7% to the closing price of 134.5 pence on September 9, before the offer period began. Eleco made the scheme document available to shareholders on October 2. These terms place the November disclosure about the letter of intent within the tracking of shareholder commitments under a recommended cash offer with specified consideration.

The letter-of-intent update followed shareholder votes at the court meeting and general meeting on October 27. At the court meeting, 52,617,110 shares voted in favor of the scheme against 7,508 against, with votes in favor representing 99.99% of shares voted. At the general meeting, the special resolution was passed with 52,771,591 shares in favor against 9,621 opposed, with 142,290 votes withheld. Eleco said both meetings met the relevant approval conditions, but the scheme’s effectiveness remained subject to the satisfaction or, where applicable, waiver of the remaining conditions, including court sanction. The company expected the scheme to become effective during the first quarter of 2027 or earlier, subject to shareholder and court approvals and the satisfaction of the relevant conditions.

In the market, KKR shares closed at $100.85 on November 10, after $98.09 on November 9 and $96.48 on November 6, according to EL7 daily data. These prices relate to KKR shares, while the disclosure concerns a change in a letter of intent covering Eleco shares; KKR’s share prices therefore do not directly measure trading in the target company’s stock. The published support figures remain tied to the scheme vote: 44.7% of capital was covered by irrevocable undertakings and non-binding letters of intent on November 10. The letter whose coverage declined relates to Charles Stanley alone, which retains the right to deal in Eleco shares under its terms. The next announced milestone in the deal process is the satisfaction of the remaining conditions and court sanction, with effectiveness expected during the first quarter of 2027 or earlier.