Industrial chains maker Renold (RNO:AIM) has seen its shares more than double since early March 2025 driven by private equity interest in the business.

The company revealed it had received two separate unsolicited approaches on 29 May, pitched at 77p and 81p per share respectively, from MPE (Morganthaler Private Equity) and a consortium comprised of Buckthorn Partners and One Equity Partners, equating to a 50% premium.

Management announced an agreed deal with MPE on 13 June at 82p per share, valuing the business at £186.7 million.

The share price jumped by 11% to 85p, approximately 5% above the agreed offer price amid huge trading volume, suggesting the market suspects a higher counterbid may be in the offing.

After all, the competing consortium only need to improve their 81p offer by 1p to match MPE, while if they increased their offer by the same magnitude, it implies a price around 85p per share.

While the shares have enjoyed a strong run and trade at their highest level in a decade, the valuation of the business is still very modest, trading on a single digit PE (price to earnings) ratio.

The low valuation is one reason behind the board’s decision to recommend the acquisition to shareholders.

‘The directors believe the long-term potential of the group, as a market-leading growth business in a fragmented industry, has not been adequately reflected in the price and valuation rating,’ the company argued, adding that investor sentiment towards UK smaller companies remained ‘subdued.’ 

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