G8 chief Jenny Hutson resigns after failed takeover bid of Affinity Education

G8 EDUCATION chair Jenny Hutson fell on her sword yesterday, taking responsibility for the Gold Coast childcare group’s failed takeover bid for smaller rival Affinity Education.

Childcare operator G8 Education, the Gold Coast's largest listed company, held its annual general meeting at Southport Yacht Club today. Photo of Jenny Hutson. Pic by Richard Gosling

G8 EDUCATION chair Jenny Hutson fell on her sword yesterday, taking responsibility for the Gold Coast childcare group’s failed takeover bid for smaller rival Affinity Education.

“It was deliberately clear that I was driving the strategy to take over Affinity and, while it landed us in a situation which was quite satisfactory economically, in the end we didn’t succeed,” she said.

“There is no question that we set out to do (the takeover) under my leadership and we haven’t achieved that.”

Ms Hutson, who will step aside as chair on October 15, said “having led the proposed acquisition of Affinity Education, it is time for me to step aside and for there to be renewal at board level”.

G8 shares, which have been under pressure of late, falling 46 per cent from an all-time high of $5.59 last August, shed 10¢, or 3.23 per cent, to close at $2.99 amid market uncertainty over the company’s future direction.

Non-executive director Matthew Reynolds will act as interim chair while G8 looks to recruit an external chair to replace Ms Hutson.

G8 said it had been “highly acquisitive” since 2010, following Ms Hutson’s appointment, “with centre additions each year”.

But G8’s hostile $185 million final 80¢ a share cash and scrip takeover tilt fell short after Affinity stitched up a superior $213 million cash deal with private equity firm Anchorage Capital Partners which will see it pay 92¢ a share to take control of Affinity’s 161 centres.

G8 has since agreed to sell its stake of almost 25 per cent in Affinity.

Despite the failure, Ms Hutson defended her aggressive roll-up strategy.

“We can reflect back and say this (takeover attempt) might have been done differently but G8 has always been defined by price discipline in relation to acquisitions,” she said.

“It was not a case of being emotionally attached and doing a deal for the sake of doing a deal.

“Yes, we put ourselves on the front foot at 80¢ and didn’t anticipate anyone else would see fair value at 92¢, so good luck to them (Anchorage); we were a buyer at 80¢ but a seller at 92¢.”

G8 will recoup around $9 million from the sale of its stake in Affinity.

Ms Hutson said she was proud to have led G8 through a period of rapid expansion.

G8 is now Australia’s largest listed childcare operator with 457 centres and licensed capacity of 33,402 children.

“G8 was a very small business with a market capitalisation of $4.4 million when we started and is now a $1.2 billion business with over 10,000 staff looking after 40,000 families,” she said.

G8 had declared and paid quarterly dividends since 2010 and had “10 consecutive periods of relative outperformance compared with prior periods”.

Ms Hutson, founder and managing director of corporate advisory firm Wellington Capital, also praised managing director Chris Scott, saying working with him at holiday and travel letting group S8 since 2001 and later at G8 had been a “fabulous journey”.

“Chris Scott and I have had the fortunate opportunity to work in a lot of businesses together,” she said. “In 25 years I’ve peered into a lot of wonderful companies driven by great businessmen and Chris Scott is top drawer.”

Scott, meanwhile, said: “Now that Jenny is moving on, I have been talking to institutional investors who have suggested that it might be more appropriate to recruit a high-profile chairperson from either Melbourne or Sydney.”