At time of writing, the Navitas Limited [ASX:NVT] share price has rocketed up 21.6% due to a potential takeover.
The proposed takeover is led by a consortium that includes Australian private equity firm called BGH Capital, Australian Super and Navitas co-founder and top shareholder, Rod Jones.
Navitas is a private education company that operates 120 institutions in 31 countries, and services 80,000 students.
Navitas’ share price responds to takeover despite recently reporting first loss
Two months ago, Navitas posted its first loss since its listing in 2004.
Despite this, news of a takeover has buoyed the share price to highest level since January as seen below:
The proposed takeover bid would offer ‘$5.50 per share in cash, or A$2.75 per share in cash and one ordinary share in the new unlisted company that will own Navitas for every two shares held in Navitas’.
One analysts explains how a takeover bid helps:
‘A private equity firm can come in and change the strategy, make it growth-orientated, possibly do some M&A and bring it back to the market in a couple of years.’
However, some doubts remain over whether the takeover bid will be successful.
The board is currently considering the proposal and all the leaders from the consortium have not commented, except for the former CEO Rod Jones.
He said that the offer was ‘in the best interests of all Navitas shareholders’.
In US markets, Navitas has faced pressure due to stricter immigration laws while also losing major government contracts in Australia.
However, its prospects in the local market may improve with increased immigration and a weaker Aussie dollar.
For Money Morning
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