Cashed-up careG8's resemblance to ABC Learning's boom days is...

Cashed-up care

G8's resemblance to ABC Learning's boom days is growing.

The childcare juggernaut continues to hoover up the competition, buying Sterling Early Education's 91 centres on Monday for $228 million, largely financed through debt and cash reserves.

At least the team behind G8, Chris Scott and Jenny Hutson, have form in this game having acted as consolidators in the travel industry with S8.

Let's hope the G8 caper has a happier ending than its travel predecessor which was sold to MFS ahead of its implosion during the financial crisis. There are other risks of course, as noted recently by Montgomery Investment Management. In an article on G8, Montgomery says: ''Of course, to avoid the fate of ABC, it will be important the company resists the temptation to pay more than four times EBIT for centres or over-gear in the pursuit of growth.'' CBD is not sure if it is pertinent that G8 says it is paying ''5.79 times anticipated centre-based EBIT for the full 12 months of the financial year ending December 31, 2015.''


Read more: http://www.smh.com.au/business/a-few-gremlins-in-asic-system-20140324-35e5u.html#ixzz2wvJyWW3g