G8 confirms sale of 25 centres in WA to Sparrow Early Learning for $6.4m
G8 Education Ltd has entered into an agreement to sell 25 early childhood education and care centres in Western Australia (WA) to Queensland (QLD) based operator Sparrow Early Learning for a total of $6.1 million.
The move will see G8’s exposure to Western Australia fall from the current 67 centres to 42 centres once the transaction has been completed in December 2019 and marks the first significant divestment since the current portfolio review exercise began.
Post the transaction G8 will have around 492 centres in Australia.
Notably, the sale will see average occupancy of the remaining WA centres rise by 10 per cent, implying that the centres divested were low occupancy centres and will see savings of as much as $330,000 per annum in capital expenditure.
G8 will initially use the proceeds of the transaction to pay down debt with a view to recycling the proceeds into growth opportunities as they arise.
Sparrow Early Learning will be paying approximately 4.1x FY2019 earnings before interest and tax for the 25 WA centres and will see their current network of 34 centres located across Queensland and Victoria increase substantially.
Commenting on the transaction the G8 Managing Director said “The sale of these centres is consistent with our strategy of regularly reviewing our portfolio to optimise the performance of the Group’s centre network” and that the divestment “will enable G8 to increase its focus on the execution of our strategic program and the existing Greenfield pipeline.”
To read the announcement please click here.