Navitas’ Board Dumps Proposal From BGH Consortium

On 12 November 2018, the leading global education provider Navitas Ltd (ASX: NVT) announced that it has rejected the further takeover offer from the BGH Consortium as BGH Consortium has not changed the offer price and they have re-affirmed a price of $5.50 cash per Navitas share. Following the release of this news, the share price of the company decreased by 0.48 percent as on 12 November 2018 (mid-day trading).Â

BGH, AustralianSuper and the former Navitas chief executive, Mr. Jones made this offer on 9 October 2018 to buy 100% shares of Navitas at about $2 billion and after carefully reviewing the offer, the board of Navitas concluded that the Indicative Proposal does not reflect the value implied by the management’s strategy and plan. As per today’s announcement, the board is still having the same view that the proposal is significantly below its assessment of value, having regard to the medium- and longer-term potential of Navitas and pursuing the indicative proposal in its current form would not be in the best interests of all Navitas shareholders.

According to the management’s strategy and plans, the Board believes that Navitas is positioned to achieve the financial forecasts implied by its 2020 targets, with a forecast EBITDA of $200m in FY 2021, and a target EBITDA in excess of $250m by FY2023. Navitas’ CEO and Managing Director, Mr. David Buckingham is going to release a presentation on ASX tomorrow, in which he will provide further information regarding the earnings potential of Navitas, which underpins the Board's conclusion that pursuing the proposal would not be in the best interests of all Navitas shareholders. In that presentation, he will be informing about the growth from mature colleges which are expected to deliver $28m of incremental EBITDA by FY21. The presentation will also discuss about the growth from new colleges which are expected to deliver $13m of incremental EBITDA by FY2021. As Per Mr. David Buckingham, the company’s growth outlook in the medium and longer term is strong and the Company is now at an earnings inflection point. The company is expecting to deliver significant additional financial value with eight new partner contracts signed or expected to be signed in FY2019 and a strong further contract pipeline.

In FY18, the revenue of Navitas decreased by 3% to $931m as compared to last year. The EBITDA of the company decreased by 47% to $82m in FY 2018 due to Careers and Industry rationalization cost and $10.1 million contribution from closed University Partnerships colleges in FY 2017. The reported net loss after tax of the company was $55.8m in FY18 and basic loss per share was 15.6 cents. The operating cashflow for FY18 was $92.301 million.

In the last six months, the share price of the company increased by 18.14 percent as on 9 November 2018. NVT’s shares traded at $5.185 with a market capitalization of circa $1.87 billion as on 12 November 2018 (AEST 1:25 PM).


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