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News and Education

G8 Education to acquire competitor

by Gavin Madson | Mar 24, 2014

Key points:

  1. Represents a major acquisition – consistent with its growth agenda
  2. Adds 6,203 licensed childcare places bringing GEMs total places to 27,995
  3. Settlement to occur progressively from 31 March 2014 to 30 September 2014

The acquisition announced includes the right to all of Sterling Early Education Limited’s issued capital and 91 premium childcare and education centres from various vendors. As a result of these acquisitions, GEMs licensed places will increase by 6,203 places to 27,995 an increase of 28.5%.

Due to the size of the transaction/acquisitions, it will occur progressively between 31 March 2014 and 30 September 2014. The 91 centres are expected to contribute $39.4m in annualised EBIT in the 2015 financial year with the aggregate price of $228m representing 5.79 times anticipated EBIT (noting that the acquisition includes the equity in Sterling Early Education in addition to the centres). This acquisition represents a significant transaction with broader benefits as GEM are acquiring one of the larger for-profit childcare providers in the Australian market.

GEM entered a trading halt on the ASX at the time of the announcement as the company “is making a placement of ordinary shares”. It is expected that GEM will soon provide an update in respect of this capital raising and we will further communicate once this is to hand.