AFR Artcile, page-2

Yes, I have seen it, and to me the authors seem to be talking in purely hypothetical terms, i.e. GEM is trading at a low PE relative to the past, and someone might be interested.

Anyway, the article is not behind a paywall, so I’ll just copy and paste it here for everyone’s convenience:

Cheap G8 Education has childcare tyrekickers looking sideways

by Sarah Thompson Anthony Macdonald

As bankers and financial investors brush up on the Australian child care market, you have to wonder whether dealmaking activity will stretch beyond the up-for-sale Affinity Education.
Because if Affinity Education's hopefuls looks sideways - and have deep enough pockets - they'll notice the sector gorilla isn't as sought after as it used to be.
G8 Education is trading at 13-times current year earnings, which is about as cheap as it has been for the past six years according to Bloomberg.
It has fallen out of favour with the big brokers and small cap fundies can reel off a list of three or four reasons why it has shifted from the growth camp to the value camp in the past year.
But whatever the view of listed equity markets, private equity dealmakers may look at things differently.
It is still the largest commercial childcare operator, with about 500 childcare centres, $800 million revenue and $162 million in earnings before interest and tax last year. And it faces the exact same tailwinds as Affinity Education's tyrekickers have been told to think about.
The difference is it is big, which means a smaller buyer universe. [Affinity, which is subject to private equity interest in its auction, has about 150 centres and $60 million earnings.]
G8 Education has a $1.1 billion market capitalisation and another $300 million or so debt as at December 31.
Add a standard 30 per cent takeover premium, and it would likely mean a $1.7 billion to $1.8 billion deal which is big enough to rule local private equity firms in the absence of some cashed up co-investors.
Which means it is likely to be one investment banks would have to pitch to the global firms. Although they, too, seem to be targeting smaller deals.
The sticking point could be debt. Childcare has not been the happiest hunting ground for Australia's big banks.