Kidicorp justify ABC purchase

Early childhood education provider Kidicorp has doubled its network of centres to 230 through its purchase of rival ABC Learning, but insists the merger doesn’t represent the ”McDonaldisation” of the sector.

Kidicorp managing director Wayne Wright said yesterday it had entered an agreement to acquire ABC for an undisclosed sum.

The amalgamated company will boost Kidicorp’s market share to eight per cent of the New Zealand market.

ABC will become the major brand for Kidicorp, an umbrella organisation for brands such as Topkidz, First Steps, Early Kids, Kids to Five and Montessori.

The newly amalgamated company will provide services to just over 15,000 children and employ over 3500 people. Kidicorp will also own the New Zealand College of Early Childhood Education, with a campus in Christchurch.

Kidicorp is owned by the family trust of Tauranga-based Wright and his wife Chloe, who have five children and six grandchildren, and said they want to make a positive difference in children’s lives.

”We’re not running a McDonalds. Just the opposite,” said Wright. They want to work with Government to ensure children missing out on early childhood education have a chance to be prepared for school. Kidicorp plans to buy mini-buses, install safety seats, and liaise with social agencies to take children who normally wouldn’t attend the centres.

ABC’s Australian parent collapsed in late 2008 owing A$1.6 billion ($2 billion). About 700 ABC Learning centres were sold to not-for-profit syndicate GoodStart in December 2009.

Sydney-based receivers McGrath Nicol had tried to sell the Kiwi subsidiary since 2008.

Wright made a bid for ABC’s business in November 2009, but was turned down.

At the time the receivers had an unrealistic expectation of the value of ABC’s business, with prices touted north of $30 million, he said.

Childcare isn’t a high margin business because of the numerous outgoings including wages, centre upgrades, and rent, said Wright. ”There is only so much parents will pay and the Government will subsidise,” he said.

McGrath Nicol approached Wright about three months ago and the deal was finalised recently.

Wright, an entrepreneur, made his money from the 1970s to the 1990s through his start-ups in the construction, property development and telecommunications sector.

Chris Cowan of McGrath Nicol declined to comment.