CHILDCARE SHAKE-UP AS G8 EDUCATION LAUNCHES $162M BID FOR AFFINITY

Written on the 3 July 2015 by Nick Nichols

CHILDCARE SHAKE-UP AS G8 EDUCATION LAUNCHES $162M BID FOR AFFINITY

THE listed childcare sector is poised for a major shake-up after G8 Education (ASX:GEM) launched a $162 million takeover bid for Affinity Education Group (ASX:AFJ).

The all-scrip offer, which is priced at 70c a share, comes as G8 acquired a 16.4 per cent stake in Affinity and a massive slump in in Affinity's share price following a profit update by the company.

G8 has snared 38 million shares in the fellow Gold Coast childcare centre operator which has been struggling to deliver its first bottom-line profit for shareholders since listing at the end of 2013 Affinity, which released an earnings update yesterday, suffered a share slump of more than 40 per cent even though it affirmed it would be paying a dividend from the FY15 result. The shares hit a low of 49c as 53.5 million shares changed hands.

G8 is proposing share-based offer that is pitched at a 29 per cent premium to Affinity's closing price of 54c on Thursday.

It is offering one G8 share for every 4.61 Affinity shares held, which prices the offer around 70c a share.

The conditional offer is subject to G8 acquiring a minimum 50 per cent shareholding in Affinity and due approvals by the ACCC and the Australian Competition Tribunal.

G8 chair Jenny Hutson describes the offer as "compelling value" for Affinity shareholders.

G8 has declined to comment further, pending the release of the bidder's statement which is due within 21 days. Affinity's CEO Justin Laboo could not be contacted for comment.

The Southport-based Affinity has 161 childcare centres in its portfolio, accounting for 12,000 childcare places and 3600 staff. G8 controls more than 34,000 childcare places and is Australia's largest listed childcare centre operator.

Affinity says it is on track for pre-tax earnings of up to $32 million for the 2015 financial year, although there is no indication whether that will be enough to bring the company's bottom line into the black for the first time.

Affinity says the second half of FY15 will produce earnings before interest, tax, depreciation and amortisation of between $7.5 million and $8.5 million.

G8's shares edged lower this morning following the takeover announcement, trading around $3.15. Affinity regained some lost ground, surging 13c to 67c with more than 14 million shares traded.


Author: Nick Nichols

Latest News

DARK DAYS AHEAD FOR AUSTRALIAN RETAIL AS REPORT FORECASTS MAJOR INDUSTRY ROUT

ALMOST 1,600 retail businesses are at risk of imminent collapse, including 21 major retailers with turnovers of more ...

GOODMAN TAKES PROFIT AND REVENUE DECLINE BUT LOOKS TO CASH IN ON AMAZON'S ARRIVAL

Commercial and industrial property group Goodman (ASX: GMG) has reported underlying full year net profit has dropped ...

REPORTING SEASON WRAP: MONDAY HIGHLIGHTS

* FORTESCUE Metals (ASX: FMG) reported net profit after tax (NPAT) of $2.64 billion for the year to June 30, up fr...

ARIADNE CUTS DEMANDS FOR FOUR ARDENT BOARD SEATS TO TWO AHEAD OF EGM

REBEL shareholders have reduced their demands on embattled theme parks operator Ardent Leisure (ASX: AAD) to give the...

Related News

DARK DAYS AHEAD FOR AUSTRALIAN RETAIL AS REPORT FORECASTS MAJOR INDUSTRY ROUT

ALMOST 1,600 retail businesses are at risk of imminent collapse, including 21 major retailers with turnovers of more ...

REPORTING SEASON WRAP: MONDAY HIGHLIGHTS

* FORTESCUE Metals (ASX: FMG) reported net profit after tax (NPAT) of $2.64 billion for the year to June 30, up fr...

WESFARMERS BOOKS BUMPER PROFIT BUT SUPERMARKET WAR HITS COLES' BOTTOM LINE

SUPERMARKET giant Coles has posted its biggest slide in earnings since it was acquired by Wesfarmers (ASX: WES) 10 ye...

ANALYSTS PREDICT WHAT AUSSIE LIVING IS LIKELY TO BECOME IN THE NEXT CENTURY

AS THE Australian population continues to grow, analysts are predicting what the country is likely to look like wi...

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