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Australia's Navitas' shares skyrocket on nearly $2b buyout offer 

posted onOctober 11, 2018
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Australia's largest private education provider Navitas ended Wednesday's trading session higher by 21.84% after the S&P/ASX200 company announced it had received a 1.97 billion Australian dollar ($1.4 billion) buyout offer from a consortium.

Led by private equity firm BGH Capital, the consortium consisting of pension fund AustralianSuper and Navitas co-founder and top shareholder Rodney Jones, is seeking to acquire 100% of the outstanding shares in Navitas, offering shareholders $5.50 cash per share, which represents a 26% premium to the closing share price at the end of the previous day's trading. 

The consortium has also proposed an alternative offer for shareholders to receive $2.75 cash per Navitas share and one ordinary share in RollCo, a newly formed unlisted company that will initially own Navitas, for every two shares held in Navitas. 

Rod Jones Navitas cofounder
Navitas co-founder and former CEO Rod Jones Photo:STEFAN GOSATTI

“I believe this is a fair and equitable deal, struck at an appropriate premium to Navitas’ prevailing share price, and is in the best interests of all Navitas shareholders,” said Jones, who resigned as the company’s chief executive in February but remains a non-executive director. 

“I remain passionate about the Navitas business and the education sector, which is why I have agreed to vend half my shareholding into the new holding company.”

The Navitas board said it has not yet formed a view on the consortium's proposal. In a statement the Peth-based company said it  was reviewing the offer with its financial adviser, Goldman Sachs, and legal adviser Ashurst “and will inform shareholders of the outcome of this review in due course”.  

Navitas share price oct10 2018

(Navitas share price Oct.10, 2018 Source: Investing.com)

The bid is conditional on the company keeping net debt no higher than A$191 million on 30 June 2019, in line with brokers' estimates and on financial targets remaining “supportable and achievable”. 
Jones, who has a 12.6 per cent stake in Navitas said he would expect to stay on as a non-executive director if the deal proceeds. 

The nation’s biggest listed private education company delivers an extensive range of educational services to over 80,000 students annually through more than 120 institutions in 31 countries.

In August, Navitas reported an after tax loss of $55.3m for the 2018 financial year with the result significantly affected by $123.8m of one-off charges associated with the recently announced plan to rationalise the business portfolio of the Careers and Industry Division. The performance of the Group prior to these charges was in line with market expectations with pro forma EBITDA of $144.0m. 

Australia's ASX 200 gained 0.14 percent Wednesday to close at 6,049.8, with most sectors higher.