G8 Education Limited has entered into contractual arrangements with various vendors, conditional upon customary licensing and landlord approvals. The acquisitions will be funded from existing cash reserves. Subject to these conditions being satisfied the acquisitions are expected to settle before the end of December 2013. The total purchase price for the 29 centres is $42.6 million with $39.8 million payable at settlement and a further payment of $2.8 million conditional upon the centre based EBIT target being achieved in the 12 months post settlement. The purchase price is based on 4 times anticipated EBIT for the 12 months post settlement. G8 Education Limited Managing Director, Chris Scott, said: “The acquisition of these premium centres is significant to G8 Education’s expansion in New South Wales and Victoria and opens the Tasmanian market for future opportunities. Together these centres will contribute $10.65 million of annualised centre based EBIT. The centres are expected to contribute to EBIT immediately upon settlement. This transaction will increase the number of places by 2,338 and continues G8 Education’s expansion in a way that is earnings per share accretive.”
GEM Price at posting:
$3.34 Sentiment: Buy Disclosure: Held
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