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Navitas share price rockets 15% higher on improved takeover proposal

In morning trade the Navitas Limited (ASX: NVT) share price has rocketed higher following the receipt of a revised proposal from the BGH Consortium.

At the time of writing the education services provider’s shares are up 15% to $5.65.

What is the new proposal?

In October of last year the company received a $5.50 per share non-binding and conditional proposal from the BGH Consortium.

This original offer was for $2.75 cash per share and 1 ordinary share in a newly formed unlisted company for every two Navitas shares owned.

In November the offer was revised to $5.50 cash per share, but was rejected by the Navitas board.

This morning the company advised that the BGH Consortium has returned with a revised non-binding all cash proposal to acquire 100% of the shares in Navitas for $5.825 per share by way of a Scheme of Arrangement.

This is a 5.9% increase on the previous offer and has been enough to sway the Navitas board. It intends to unanimously recommend the revised proposal to shareholders.

It stated: “The Board’s assessment of the Revised Proposal has been informed by its views of the medium and longer term potential of Navitas and the opportunity for shareholders to realise certain value for their investment, as well as the BGH Consortium’s preparedness to lift the contractual restrictions (on Mr Rod Jones and AustralianSuper) that would otherwise prevent those Navitas shareholders from supporting any Superior Proposal that may emerge.”

The BGH Consortium will be granted exclusive due diligence until no later than February 18, subject to no superior proposal emerging which the BGH Consortium does not match.

The proposal is also subject to an independent expert concluding that the revised proposal is in the best interests of Navitas shareholders.

What now?

It looks like the BGH Consortium has finally sealed the deal on this one. I think it’s a fair offer for shareholders and can’t say I’m surprised to see the board recommend it.

If you’re now looking for somewhere else to invest in the education sector then IDP Education Ltd (ASX: IEL) could be a good option. As could G8 Education Ltd (ASX: GEM) if trading conditions in the childcare industry improve this year. Though, in respect to the latter, I’d suggest investors wait for an update with its half year results release next month.

Motley Fool contributor James Mickleboro 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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