BGH Capital-led bid for Navitas reasonable: Macquarie

16/10/2017Rod Jones, CEO of Navitas, Perthpic Colin Murty The Australian

Macquarie analysts have described the $2 billion price offered for education provider Navitas by BGH Capital as reasonable and says the likelihood of another bid emerging appears relatively low.

Yesterday, Navitas (NVT) revealed it had received a $5.50 per share offer from BGH Capital — a 26 per cent premium to its last traded share price.

Shares in the company were trading at about $5.27 mid morning with the bid still subject to due diligence.

“In our view, the bid premium appears reasonable in the context of historical valuation levels, representing a 16 per cent to 18 per cent premium over three to five years.”

It also looked reasonable with respect to other comparable transactions.

A key peer is the Providence Equity Partners-owned Study Group.

Providence had been seeking a valuation of about £700m at an implied value of 15 times earnings before interest, tax, depreciation and amortisation for Study Group in a recent failed sale process.

“The likelihood of further bids emerging (for Navitas) appears relatively low, particularly given deal structure,” Macquarie said in the note.

As part of the bid, co-founder and former chief executive Rod Jones will own a 12.5 per cent stake in the business and will collect 50 per cent cash and roll the remaining 50 per cent into the newly delisted company.

“ Rod’s support is likely to be key in terms of gaining buy-in from other Navitas co-founders who collectively hold about 40 per cent of the register.

AustralianSuper also owns about 5 per cent of the stock and will back only the BGH bid.