AFFINITY COURTS HIGHER BID FROM PRIVATE EQUITY

Written on the 24 August 2015 by Nick Nichols

AFFINITY COURTS HIGHER BID FROM PRIVATE EQUITY

AFFINITY Education (ASX:AFJ) has rushed to private equity to fend off an unwanted takeover offer from larger rival G8 Education (ASX:GEM), hoping that a 90c-a-share bid will do the trick.

The proposed cash offer, which is still subject to due diligence, trumps G8's existing offer of 80c cash or an equivalent share swap that will give Affinity shareholders a chance of riding G8's earnings future.

Anchorage Capital Partners, a private equity group that specialises in corporate turnarounds, has been revealed by Affinity as the preferred bidder for the company's shares.

The Sydney-based firm is best known for its $20 million buyout of Dick Smith from Woolworths (ASX:WOW) in 2012 and the subsequent $520 million float of the business in 2013.

However, the Affinity announcement comes as G8 reveals it is making ground with Affinity shareholders despite the Affinity board urging them to do nothing while it undertakes discussions with other parties for a potential rival bid.

G8 has lifted its holding in Affinity from 19.9 per cent to 24.48 per cent as an extra 10.6 million shares were snapped up through the existing offer.

More acceptances by G8 will make Affinity's task of opting for the new bid that much more difficult as any offer by Anchorage will be subject to shareholder approval.

In its target statement issued today, Affinity describes G8's offer as neither fair nor reasonable.

It says the offer does not reflect Affinity's long-term value, and has come at an opportunistic time when the company's shares have slumped to their lowest level on record.

However, the $208 million Anchorage bid is still subject to due diligence which is expected to be completed by September 21.

Affinity says that should a better offer not emerge by then, it will be backing the sale of Affinity shares to a new entity created by Anchorage.

The big negative for long-term Affinity shareholders, however, is that the 90c offer is still below Affinity's issue price of $1 a share and the deal delivers no further upside than the 10c premium on G8's offer.

Affinity, which had indicated it was talking to a number of parties to secure an alternative to G8's proposal, says it has entered a period of exclusivity with Anchorage until September 21.

"Subject to the execution of binding transaction documents in relation to the proposed transaction, and no superior proposal emerging, your directors intend to unanimously recommend that shareholders approve the proposed transaction in the absence of a superior proposal," says the company in a statement.

G8 has already said its offer, which closes on September 28, is final and will not be increased.

 


Author: Nick Nichols

Latest News

ADELAIDE APARTMENT BREAKS OFF-THE-PLAN RECORD WITH $3M SALE

AN apartment in 'The Adelaidean' residential development in Adelaide has sold for more than $3 million, which...

CABCHARGE GIVEN GREEN LIGHT TO BUY YELLOW CABS IN QUEENSLAND FOR $20M

THE consumer watchdog will not oppose the proposed acquisition of Yellow Cabs in Queensland by taxi payment service C...

SLEEPING ROUGH IN THE NAME OF CHARITY: 170 BRISBANE BUSINESS LEADERS TAKE PART IN THE CEO SLEEPOUT

OVER 170 Brisbane CEOs and business leaders will brave the cold tonight to fight homelessness in what will be the big...

DOMESTIC TOURISM IN AUSTRALIA BREAKS RECORDS, INJECTS $61.7 BILLION INTO NATIONAL ECONOMY

DOMESTIC Australian tourists have spent a record breaking $61.7 billion on intra and interstate travel this year, acc...

Related News

DOMESTIC TOURISM IN AUSTRALIA BREAKS RECORDS, INJECTS $61.7 BILLION INTO NATIONAL ECONOMY

DOMESTIC Australian tourists have spent a record breaking $61.7 billion on intra and interstate travel this year, acc...

THE DOCTORS WHO PLUNGED INTO THE SHARK TANK AND SURVIVED WITH A $500,000 INVESTMENT

THEIR mission is to change the face of cancer care with an app that empowers and connects patients and care givers...

IMF BRACES FOR BIG LOSS FOLLOWING WITHDRAWAL FROM SPOTLESS CLASS ACTION

LITIGATION fund IMF Bentham (ASX: IMF) is set to lose as much as half a million dollars after it ceases funding one o...

WAGERING GIANTS TABCORP AND TATTS GIVEN GREEN LIGHT FOR $11B MERGER

THE Competition Tribunal has approved Tabcorp's (ASX: TAH) $11bn takeover bid for Tatts (ASX: TTS) on the conditi...

BOOK YOUR FUNCTION SPACE HERE

 

 

 

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter