Message #7 From:
NewsBot Date: December 13, 2006 01:30:00 PM
ABS News ABC Buys La Petite Academy and Busy Bees
BRISBANE, Australia--(BUSINESS WIRE)--A.B.C. Learning Centres Limited (ASX: ABS) today announced that it has
entered into a definitive agreement to acquire Chicago-based childcare
services provider La Petite Academy from an affiliate of JP Morgan
Partners, LLC, other investors and management for approximately US$330
million.
As a result of the acquisition, ABC - the world’s
largest publicly traded provider of childcare services - will become the
second-largest private childcare provider in the United States, just 11
months after entering the US market. The acquisition will more than
double the number of centres that ABC operates in the US. This follows
ABC’s acquisition of two other US childcare
companies, Learning Care Group Inc in January, 2006, and Children’s
Courtyard in August, 2006.
In separate transactions, ABC also announced two other agreements:
To acquire for UK£71 million a leading
United Kingdom childcare company, Busy Bees Group Ltd. Busy Bees
devised and operates an innovative childcare voucher system which ABC
believes it can apply in other countries.
To acquire 49 childcare centres in New Zealand and six in Australia
for A$65 million from Macquarie Leisure Services Pty Ltd. These
centres will be integrated into ABC’s
existing operations.
The total cost of the all-cash acquisitions is approximately A$680
million (US$522 million), which ABC will finance with a new debt
facility provided through a syndicate consisting of Westpac, the
Commonwealth Bank, Bank of America and Goldman Sachs.
ABC said as a result of the acquisitions, management has increased its
EBITDA forecast for the period to June 2007 from in excess of A$250
million to in excess of A$273 million. ABC expects the acquisitions to
be EPS accretive for the same period.
ABC Learning Centres Chairman Sallyanne Atkinson AO said these
acquisitions affirmed ABC’s strategy of
positioning itself to take advantage of the opportunities presented by
the large, but fragmented early childhood sector in the United States,
while consolidating its market share in Australian and New Zealand.
ABC Learning Global Chief Executive Officer Eddy Groves said each of
these acquisitions makes sense for ABC both strategically and
financially.
“We expect these centres to help us extend our
record of delivering consistent improvements in our financial
performance – while also continuing to improve
the range and quality of educational programs we offer to parents and
their children on an increasingly global basis,”
Mr Groves said.
LA PETITE ACADEMY
“The acquisition of
La Petite’s
geographically diversified network of academies represents an important
step toward our strategy of building our presence in the large North
American market, where we see opportunities to apply our array of
industry-leading management and educational practices,”
Mr Groves said. “This
acquisition moves us closer to our goal of becoming the industry leader
in early childhood education and family solutions in the US.”
Mr Groves said ABC sees significant growth opportunities in the US,
where the market for childcare is extremely fragmented, with no company
having more than a 2 per cent share of the market. After the acquisition
of La Petite, ABC will serve approximately 1 per cent of the US
childcare market.
The US market has seen steady growth. According to estimates by
MarketData Enterprises, childcare industry revenues in the US have
increased at a compounded annual growth rate of 10.7 per cent since
1982. This growth has been fuelled by the entry of mothers into the
workplace – since 1990, more than half of
mothers have been working – and a steady
increase in the numbers of live births in the US.
“This transaction is
about far more than acquiring the second-largest private childcare
provider in the US. We will be bringing together educators and academies
with strong commitments to providing a quality experience for children
and their families. We are tremendously impressed with the quality of
the curriculum and staff of La Petite, from infants and toddlers to
pre-schoolers and school age children,” said
Bill Davis, President and CEO of Learning Care Group, Inc., which is ABC’s
US subsidiary.
Mr Davis said La Petite will continue to operate under its existing name
and will fall under the Learning Care Group’s
umbrella of brands.
ABC anticipates a smooth integration of the US operations. ABC expects
to replicate its successful integration of the Peppercorn centres in
Australia in 2004. The company completed that integration within 12
months of purchase, with the transaction generating significant savings
in corporate-office expenses while also strengthening the quality and
consistency of centre performance. Purchasing La Petite provides ABC
with the opportunity to achieve similar success in the US, the company
noted.
With annual revenue in excess of US $400 million, La Petite operates 650
academies in 36 states and has the capacity to serve 97,500 children
with an average centre size of 150 places. Following the acquisition of
La Petite, ABC will operate 1038 centres in the US with a licensed
capacity to care for approximately 156,000 children. The company has
delivered substantially improved financial performance in recent years,
including approximately 19 per cent compound annual growth in EBITDA
over the past 5 years.
ABC intends to seek to retain many of the managers and executives of La
Petite as it integrates them into its Learning Care Group.
ABC Management expects the purchase of La Petite for US$330 million to
lead to an EBITDA contribution after identifiable synergies of
approximately US$45 million in 2008. The benefits of anticipated
cost-saving synergies will not be fully realised (on an annualised
basis) until financial year 2009.
Closing of the transaction is conditioned on the receipt of regulatory
approval and is expected to occur in the first quarter of 2007.
Busy Bees Group Ltd is the 5th largest childcare provider in the UK and
operates a network of 35 owned and 12 managed centres, together offering
more than 4000 places across the UK. In addition, Busy Bees Vouchers is
one of the of the leading childcare voucher providers in the UK.
Mr Groves said the acquisition of Busy Bees will provide ABC with a
starting point for further expansion into the fragmented UK market and
throughout Europe by way of a well-established company whose committed
and experienced management team will remain in place following the
acquisition.
“Importantly, this innovative voucher system
- where the company supplies tax-efficient childcare vouchers to
employers, who offer them to their employees as a benefit in an agreed
salary sacrifice program - provides ABC Learning with a new business
segment which we believe can be applied across the global childcare
market,” Mr Groves
said.
Busy Bees’ vouchers
are accepted by all forms of registered childcare providers, including
other nurseries, crèches and out-of-school
clubs. The voucher system has the ability to generate significant cash
flow and industry sources anticipate significant growth in coming years.
The purchase of Busy Bees for UK£71 million
is expected to make an EBITDA contribution of UK£9.5
million in 2008. Busy Bees has a consistent cash balance of UK£15
million as well as property to the value of UK£22
million.
The transaction is proposed to settle Monday, December 18, 2006.
The acquisition of 49 centres in New Zealand will see ABC increase its
number of NZ centres from 28 to 77 in a total market of 1700 centres.
ABC Learning will have 1158 centres as of June 30, 2007 in Australia
following this acquisition of six centres or about 20 per cent of the
long-day childcare market.
The purchase from Macquarie Leisure Services Pty Ltd for approximately
A$65 million is expected to make a combined EBITDA contribution of
A$11.7 million in financial year 2008. As part of this transaction, ABC
also acquires a pipeline of five centres.
The transaction is proposed to settle late in the first quarter of 2007.
