Vocation Limited (ASX:VET) should trade higher after signing an agreement to acquire Endeavour College of Natural Health, one of Australia’s leading providers of higher education and vocational training in the health and wellness sector.
The acquisition is earnings accretive and complementary, and delivers on a number of Vocation’s key strategic objectives.
Most notably, it will significantly diversify Vocation’s revenue sources as Endeavour currently attracts no state or federal funding.
The acquisition also significantly strengthens Vocation’s position in the higher education market, broadens Vocation’s educational offering by providing further exposure in the growing health and wellness sector, and delivers an established national campus footprint.
The health and wellness sector continues to demonstrate significant growth in the context of an ageing population and growing awareness of natural health and fitness.
Strong growth in employment prospects for health professionals is expected over the next five years.
The transaction consideration of $84 million will be paid in cash, utilising both excess cash and a drawdown on Vocation’s established debt facility, which has been increased from $100 million to $120 million.
The consideration represents a multiple of approximately 6.5 times FY15 EBITDA, and will be accretive to Vocation’s earnings per share from FY15.
The transaction is not subject to any conditions precedent and is expected to complete on 1 July 2014.
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