The acquisition announced includes the right to all of Sterling Early Education Limited’s issued capital and 91 premium childcare and education centres from various vendors
Key points:
- Represents a major acquisition – consistent with its growth agenda
- Adds 6,203 licensed childcare places bringing GEMs total places to 27,995
- Settlement to occur progressively from 31 March 2014 to 30 September 2014
As a result of these acquisitions, GEMs licensed places will increase by 6,203 places to 27,995 an increase of 28.5%.
Due to the size of the transaction/acquisitions, it will occur progressively between 31 March 2014 and 30 September 2014. The 91 centres are expected to contribute $39.4m in annualised EBIT in the 2015 financial year with the aggregate price of $228m representing 5.79 times anticipated EBIT (noting that the acquisition includes the equity in Sterling Early Education in addition to the centres). This acquisition represents a significant transaction with broader benefits as GEM are acquiring one of the larger for-profit childcare providers in the Australian market.
GEM entered a trading halt on the ASX at the time of the announcement as the company “is making a placement of ordinary shares”. It is expected that GEM will soon provide an update in respect of this capital raising and we will further communicate once this is to hand.