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Navitas emerges from trading halt with binding offer from BGH consortium

The Navitas Limited (ASX: NVT) share price will re-commence trading on the ASX this morning after the company announced a binding offer from the BGH Consortium to acquire the company for $5.825 per share cash consideration.

What was in the BGH consortium update?

Navitas yesterday requested a trading halt ahead of the announcement in which Navitas Directors unanimously recommended shareholders vote in favour of the Scheme.

The takeover offer values Navitas’ equity at approximately $2.1 billion which represents a 34% premium to the $4.35 closing price on 9 October 2018, being the trading day prior to Navitas announcing it had received the First Indicative Proposal.

The company’s share price surged nearly 22% to $5.30 per share on 10 October 2018 after announcing that it had received an unsolicited, preliminary, conditional and non-binding proposal led by the consortium led by private equity firm BGH Capital and AustralianSuper.

There was a similar theme on 15 January this year when the company received a revised indicative proposal from the BGH consortium for $5.825 per share, which saw the share price surge a further 12.9% to $5.53 per share.

The transaction still needs to gain all relevant approvals, including that of Australia’s Foreign Investment Review Board (FIRB) and certain relevant US education regulatory authorities.

Navitas management also announced that given its reduced franking balance in FY18 it does not expect to pay a special dividend as it is not in the best interests of the company.

What else has Navitas announced?

Prior to its shares entering a trading halt, Navitas announced that SAE Education Limited had successfully appealed the Supreme Court’s decision regarding SAE UK’s value-added tax (VAT) exemption status.

SAE won a unanimous decision to uphold the First Tier Tribunal’s finding that SAE UK was entitled to VAT exemption on and from May 2009, which will see a one-off contribution to Navitas FY19 after-tax profit of ~$5 million for VAT expensed in previous financial years.

Foolish takeaway

Despite offering a 70% franked 3% dividend yield and boasting a market cap of ~$2 billion, I think the ship may have sailed on Navitas given its current $5.62 per share valuation.

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Motley Fool contributor Lachlan Hall 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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