Think Childcare Group (ASX: TNK) shares have jumped by almost 26% today, after the company advised the ASX it has received a buyout proposal from Busy Bees Early Learning Australia for all its stapled securities.
At the time of writing, the Think Childcare share price is trading for $1.65 per share.
What was in the buyout offer
Think Childcare says that it has received an indicative, all-cash offer of $1.75 per security from Busy Bees. This price represents a premium of approximately 51% to the 10-trading day volume weighted average of $1.16 up to 13 November 2020.
The company says it is considering this offer in conjunction with another offer it received last week from Alceon Private Equity. That offer was for an indicative price of $1.351, and was proposed as an all-cash, or a combination of cash and unlisted shares in a newly incorporated holding company. At that time, Think Childcare said that it had granted Alceon a period of exclusivity until 18 December 2020 to complete its due diligence process.
Today’s offer from Busy Bees is subject to a number of conditions, including the termination of the process deed with Alceon. Think Childcare advised its shareholders not to take any action in relation to either the Alceon proposal or the latest one, as there is no assurance that either proposal will result in a transaction.
What is Think Childcare and why does it want to sell its business?
Think Childcare owns and operates childcare facilities in Australia. It focuses on operating its 30 long day childcare facilities for children between the ages of 6 months and 6 years old.
The company has faced difficulties this year as coronavirus lockdown restrictions also closed down many of its childcare centres. As a result, the company is under pressure to service its debts. The latest balance sheet data for 30 June 2020 shows that Think Childcare has $35.8 million in liabilities that are due within a year, and $211.9 million in the year following.
Although Think Childcare holds $11.8 million in cash and has $8.48 million of receivables due within 12 months, the much larger liabilities figure is casting a towering shadow over its liquidity and current market cap of just $76 million.
How has the Think Childcare share price performed in 2020?
As mentioned, childcare centres were among the first casualties when the pandemic struck. The Think Childare share price went from $1.41 at the start of 2020 to 60 cents by the end of March, at the height of the restrictions.
The Think Childcare share price has since regained much of its value, trading for $1.65 per share at the time of writing.
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More reading
- Think Childcare (ASX:TNK) share price lifts 4% on buyout offer
Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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