In a second set back for local buyout group BGH (See the Healthscope story), education pioneer, Navitas has rejected the $2 billion offer from the group which includes founder and current director, Rodney Jones.
His presence in the bidding group looks like being a distraction to a conclusion of the bid, one way or the other. At the moment his presence seems to be a rather emotional negative.
But while saying the BGH offer undervalued the company’s plans for the future, Navitas made it clear it is still willing to engage to see if it can get more for the company than $5.50.
Navitas told the ASX on Monday it had reviewed the indicative proposal and decided it was inadequate:
“The board of Navitas remains of the view that the Proposal is significantly below its assessment of value, having regard to the medium and longer term potential of Navitas. As such, it has concluded that pursuing the indicative proposal in its current form would not be in the best interests of all Navitas shareholders,” the company said yesterday.
“Based on management’s strategy and plans, the Board believes that Navitas is positioned to achieve the financial forecasts implied by its 2020 Targets, with a forecast EBITDA of $200 million in FY2021, and a target EBITDA in excess of $250m by FY2023, subject to assumptions that will be outlined in a presentation released to the ASX tomorrow. (Tuesday).
The BGH consortium – which includes AustralianSuper (as does the Healthscope offer), which owns 5% of Navitas shares – revealed its $2 billion bid on October 10, offering shareholders $5.50 in cash for each Navitas share, which was a 26% premium to it closing share price a day earlier.
Navitas’ statement had no impact on the shares which ended the day unchanged on $5.21 as investors reckoned there was more to come in what is an unstable situation with the board continuing to fight with Mr. Jones.
And there could be other offers, with the board telling the market yesterday:
“The Board is exploring with a number of parties whether they could present an alternative change of control proposal, or any other transaction that has the potential to be materially value enhancing for all Navitas shareholders.
“A number of these parties have confirmed the Board’s view that the commitments by AustralianSuper and Mr. Jones are potentially an impediment to proceeding with any competing proposal,” directors said in alluding to the ongoing dispute with Mr. Jones.
Mr. Jones – who co-founded Navitas, stepped down as CEO in February and still owns 12% of its shares. Navitas remains concerned over how his “inherent conflicts” as both a bidder and a current director are being handled.
Navitas said it had asked Mr. Jones to step aside as a director to address the conflict of interest of him being both a bidder for the company and a director, but he had refused.
The Navitas board had then tried to work with Mr. Jones “to document the arrangements it has already put in place in order to manage these conflicts”, the company said.
And while Mr. Jones had returned a signed “insider protocols” document – which would govern his behavior during the takeover – they were not the same protocols the Navitas board had agreed on, the company said.
“The board expects that Mr. Jones will comply with the insider protocols as if he had signed them in the form provided by Navitas,” the company said.
The consortium offered an alternative deal for $2.75 a share and one share in a new unlisted company that will own Navitas for every two shares they currently own. But this was also knocked back.
