Although the market as a whole has tumbled lower today, the Navitas Limited (ASX: NVT) share price has made a notable decline.
In afternoon trade the educational services company's shares are down 2.5% to $4.41.
Why are its shares lower?
Today's decline appears to be a reaction to an acquisition announcement that Navitas made this morning.
According to the release, Navitas plans to acquire Christchurch College of English Limited for NZ$5 million. This represents a multiple of approximately 5x FY 2017 EBITDA and will be funded out of its existing undrawn bank finance facilities.
Considering Navitas' shares are changing hands at an EV/EBITDA ratio of almost 12x, it is unclear why the market has responded negatively to today's acquisition.
The Christchurch College of English acquisition is subject to obtaining customary regulatory approvals and a satisfactory outcome of a periodic audit by the New Zealand Qualifications Authority.
