Navitas Limited (ASX: NVT) has been the showstopper today on Australian Securities Exchange. The stock of education services provider Navitas Limited has jumped as high as 22% on the news of $1.4 billion takeover offer.
Today, 10 October 2018, Navitas Limited announced the non-binding takeover offer it has received yesterday after the market close from BGH Consortium which has shown interest in acquiring 100% shares in Navitas at an offer price of $5.50 cash per Navitas share.
You must be wondering who these bidders are?
Well, that’s a consortium led by three partners, who are BGH Capital Pty Ltd (BGH), AustralianSuper Pty Ltd as trustee for AustralianSuper and Navitas co-founder and Director Rodney Malcolm Jones and his controlled entities.
The offer to clutch the complete ownership of Australia’s largest ASX listed education company was accompanied by an attractive 26% premium to the last close of Navitas’ share price on Tuesday.
But if Navitas shareholders rejects to accept all cash consideration the bidders have given an alternative option to receive $2.75 per share in cash and one share in newly formed unlisted company RollCo in exchange for every two shares held in Navitas Limited.
But it has been heard on the street that the acquisition may result into the privatization of Navitas’. Market researchers said that Navitas’ shareholders are doubtful of bidders’ attempt to take a company private post acquisition which outlines uncertainty to the finalization of the deal.
The Perth-based company Navitas Limited which has been operating in Australia, North America and Britain to provide English courses to foreign students may have to struggle in U.S. operations due to tighter immigration policies, visa regulations and currency movement.
The two interested parties in consortium have been already holding interest in Navitas. Pension Fund AustralianSuper holds 5.4% of Navitas’ total shares while Navitas’ co-founder and director Rodney Malcolm Jones holds 12.6% in Navitas. Subsequent to the proposal to acquire 100% Navitas, private equity firm BGH Capital Pty Ltd has reportedly entered into a cooperation agreement with these consortium partners. Under the cooperation agreement, Mr. Jones has agreed to sell 50% of his shareholding for cash and roll over his remaining 50% shares into RollCo that will initially own Navitas.
The bid comes two months later the Navitas has posted its first ever loss since its listing on ASX in 2004. As per the announcement, it has been drawn on the assumption that Navitas’ financial targets as announced on investors day are supportable and achievable while its net debt is expected to be in line with broker estimates, i.e. within $191 million on 30 June 2019.
However, Navitas remains silent to any recommendation for its shareholders. The company informed that it will take a detailed review of the proposal before arriving on any conclusion. The bid is said to be judged in conjunction with financial adviser Goldman Sachs and legal adviser Ashurst.
As the market was bullish on takeover proposal, Navitas Limited’s stock sky rocketed 21.84% to last close at $5.30 on 10 October 2018. But the stock has fallen by 4.61% over the past one year.
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