Listed Queensland-based childcare and education centre operator G8 Education Limited (ASX: GEM) is pleased to announce that it has contracts in place to acquire 29 premium childcare and education centres. The childcare centres are located across New South Wales, Tasmania and Victoria.
G8 Education Limited has contractual arrangements with various vendors, conditional upon customary licensing and landlord approvals. The acquisitions will be funded from existing cash reserves. Subject to these conditions being satisfied the acquisitions are expected to settle before the end of December 2013.
The total purchase price for the 29 centres is $42.6 million with $39.8 million payable at settlement and a further payment of $2.8 million is conditional upon the centre based EBIT target being achieved in the 12 months post settlement. The purchase price is based on 4 times anticipated EBIT for the 12 months post settlement.
G8 Education Limited Managing Director, Chris Scott, said: “The acquisition of these premium centres is significant to G8 Education’s expansion in New South Wales and Victoria and opens the Tasmanian market for future opportunities.
Together these centres will contribute $10.65 million of annualised, centre based EBIT. The centres are expected to contribute to EBIT immediately upon settlement.
This transaction will increase the number of places by 2,338 and continues G8’s expansion in a way that is earnings per share accretive.”