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Highlights
- EDU Holdings has entered an agreement for 100% acquisition of shares in a vocational education provider.
- The acquisition, valued at AU$6 million, expedites EDU's strategic entry into the nurse training market.
- The acquisition adds 18% to EDU’s revenue and 65% to its EBITDA on a proforma CY21 basis.
Shares of EDU Holdings Limited (ASX:EDU) soared over 14% midday on 2 June 2022 after the company announced a new acquisition update.
To expedite its strategic entry into the nurse training market, the company has entered into an agreement for 100% acquisition of shares in Care Plus Training Pty Ltd, which trades as Nurse Training Australia (NTA).
The transaction will be worth AU$6 million in cash, implying an acquisition multiple of roughly 4.6x normalised CY21 EBITDA of AU$1.3 million. The acquisition is expected to complete in 3Q 2022.
Related read: What is a career readiness program, and why is it important in higher education?
CEO of EDU, Adam Davis, highlighted the transaction as a catalyst for the group to develop a higher education nursing program, in line with the company’s strategy of creating pathways from vocational to higher education.
Strategic entry into the nurse training market
NTA, a privately-owned Registered Training Organisation (RTO), provides vocational education in Health and Community Services, including nursing. It has two campuses in Burwood, Western Sydney and is mainly focused on the international student market.
In CY21, NTA generated revenue of AU$4.1 million and EBITDA of AU$1.3 million.
Acquisition rationale (data source: company update)
Capital raising to fund the transaction
The acquisition is worth AU$6 million in cash. EDU will make an upfront payment of AU$4.5 million in cash for 75% of the shares while the remaining 25% will be settled in 12 months.
Institutional Placement - The acquisition will be funded through an institutional placement, for which the company has secured commitments. The ordinary shares will be issued at a price of AU$0.13 per share to raise AU$6 million. The issue price represents a 7.1% discount to the closing price of EDU shares on ASX on 30 May 2022 and a 14.4% discount to VWAP of shares on ASX during the last 10 trading days.
Share Purchase Plan (SPP) - EDU will very soon launch a share purchase plan to provide an opportunity for eligible shareholders to purchase new shares at the same price as institutional, professional, and sophisticated investors under the placement. EDU intends to raise AU$0.5 million via the SPP.
