kds......the cat is out of the bag now...

Monopoly fears as child-care giant moves on rival
Email Print Normal font Large font By Deborah Gough
March 12, 2006

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AdvertisementTHE nation's biggest child-care operator, ABC Learning, is expected to make a $100 million-plus takeover bid for Kids Campus, one of its few remaining competitors.

If successful, the move would fulfil ABC's pledge to open another 150 centres in Australia by June, giving it about 850 centres in Australia and New Zealand. ABC Learning is expected this week to announce its bid for the publicly listed Kids Campus, which has 101 centres in Australia, about half of them in Victoria.

The deal would leave only Hutchison's Child Care Services, with 93 centres, as a major player in the child-care market. Both Hutchison and Kids Campus have struggled financially, with Kids Campus reporting a $2 million profit after tax on a $31.3 million revenue base.

The Brisbane-based ABC Learning company is on track to post a full-year profit of at least $88 million after more than doubling its interim net profits to $44 million.

It is expected that the takeover news will be announced before ABC Learning chief executive officer Eddy Groves leaves for overseas on Thursday. Mr Groves is listed at No. 2 on BRW's list of the richest Australians aged under 40 last year.

The National Association of Community Based Child Care Services said it would lodge an objection with the Australian Competition and Consumer Commission, saying the deal would give ABC monopolies in some regions.

The association lost a similar objection in 2004 over the ABC Learning merger with Peppercorn Management Group. The ACCC allowed the deal on condition that ABC sold some of its centres.

Association convener Lynne Wannan said the purchase of Kids Campus would give ABC just under half the industry. "It is really a great concern that there could be one operator who dominates child-care delivery," Ms Wannan said.

Kids Campus' share price closed at 86 cents on Friday, down one cent. ABC Learning's share price closed at $7.95, down five cents.

ABC Learning and Kids Campus did not respond to requests for comment yesterday.