Listed software firm set to be sold in £83m cross-border deal

Sutton Coldfield-based software firm Castleton Technology is to be taken private in £82.8m deal.

MRI Software, a US-based firm, will pay 95p a share for Castleton. Trading closed last night at 67p a share.

MRI, like Castleton, specialises in housing software and is owned by private equity firms TA Associates, GI Partners and Harvest Partners.

In its latest results for the first six months of its financial year, Castleton saw revenues fall by 10% to £11.6m, while the firm posted a loss of £200,000 – down from a profit of £500,000 in 2018.

In a statement this morning (15 April), MRI said that it thought Castleton was “better suited” to a private company environment, where it will be “free from the requirement to meet the public equity market’s shorter-term reporting requirements and expectations, and the costs, constraints and distractions associated with being a publicly traded company”.

David Payne, non-executive chairman of Castleton said: “Castleton has performed well since embarking on the strategy in 2013 to build a public sector-focused software and managed service business, growing organically as well as through a series of acquisitions. The competitive landscape is changing and as such I welcome the opportunity for Castleton shareholders to realise their investment at a premium of 42.9% to yesterday’s closing price. I would also like to take this opportunity to thank all the employees of Castleton for all their hard work and support.

“The Castleton directors believe that MRI Software will be an excellent partner to Castleton and its management and employees. We believe the acquisition is in the best interests of all our stakeholders and unanimously recommend that shareholders vote in favour of the resolutions relating to the acquisition.”

Patrick Ghilani, chief executive cfficer of MRI, said: “The acquisition of Castleton is a significant development for our business, delivering us critical scale in the UK real estate market and social housing sector in particular, and providing a platform to further accelerate our growth globally. A combined MRI and Castleton will be extremely well equipped to address the varying needs and evolving business models of the UK and Australian social housing sectors, with a comprehensive and flexible product portfolio. We are excited to work with the management team and employees of Castleton, to build upon their position in the social housing sector, utilising MRI’s complementary experience, capabilities, network and resources.”