Busy Bees ups Think offer by 52%, now prepared to pay $3.20 a share
Busy Bees Early Learning Australia (Busy Bees) have increased their offer for Think Childcare to $3.20 per security, 52 per cent higher than its previous offer of $2.10 per share made on 20 January 2021, and 83 per cent higher than its original offer lodged in November 2020 as it seeks to secure ownership of the listed early education and care provider after an extended takeover process.
This latest move appears to have occurred without the public declaration of a counter offer from rival bidder Alceon Private Equity who last lodged a proposal on 24 December 2020 at $1.75 per share and which was subsequently improved upon by Busy Bees in January 2020.
At $3.20 per security the offer price implies an equity value of approximately $196 million and an enterprise value (EV) of around $234 million which, after applying Think’s CY21 earning before interest, tax, depreciation and amortisation (EBITDA) guidance of $26 million, suggests an acquisition multiple of 9.0x EV to CY21 EBITDA.
The final offer price will however, be reduced by the amount of any dividend declared or paid by Think after the date of the proposal, with the statement noting that an additional fully franked dividend of up to $0.34 (or such greater amount as may be agreed with Busy Bees) per stapled security could be paid.
Proposal contemplates affiliates of CEO acquiring Think Incubator and more
The transaction structure also includes the potential for affiliates of Mathew Edwards, Think’s current CEO, to acquire for a nominal sum Think Development (TND), the Group’s in house incubator, a Nido service in Franklin ACT, together with head office and other non operating assets.
In addition, the arrangements may include the purchase of a management contract between TND and Think Childcare for a period not exceeding three years and for an amount not exceeding $5.5 million.
The contract will include a total of 55 Nido services but exclude the Franklin service referenced above.
Alceon signals support for proposal, nets $17.1 million gain in process
Rival bidder Alceon have signalled their support for the further revised offer from Busy Bees and that it intends to vote the Alceon parcel, which represents 19.23 per cent of Think securities, in favour of the proposal.
Alceon announced it had accumulated a position in Think as part of the announcement made on 24 December 2020 in which it increased its offer for the company to $1.75 per share.
Around 11.74 million shares were purchased at an average price of $1.75 and total cost of $20.52 million. Under the terms of the new proposal these securities will be worth $37.6 million.
Independent board committee grants exclusivity period as it works towards closing deal
Think’s Independent Board Committee (IBC) noted that it “has unanimously determined that, based on the current price and conditions of the further revised Busy Bees Proposal, it is in the best interest of the Independent Securityholders to further negotiate transaction documents in order to determine if a binding proposal can be presented to Independent Securityholders.”
A period of exclusivity has been extended to Busy Bees up to 14 May 2021 for the purpose of finalising due diligence and to further discuss the mechanics of the proposal, including the acquisition of TND.
“In the absence of a superior proposal and subject to an independent expert concluding, and continuing to conclude, that the Further Revised Busy Bees Proposal is in the best interests of Independent Securityholders,” the committee said.