Curro Holdings Ltd. won’t proceed with a $479 million offer for South African schools operator Advtech Ltd. after management of the target company wouldn’t allow due diligence and said no savings could be made from a deal.
“The fact that Advtech management and its board now believe that no savings are possible, makes it impossible for Curro to justify a price of 13 rand per Advtech share,” the Cape Town-based company said in a statement on Wednesday. “We wish to thank the more than 50 percent of Advtech shareholders who supported our offer both verbally and in writing.”
Curro wanted to combine its private schools with Advtech’s to gain from rising demand for paid-for teaching in South Africa, which was ranked the fifth-worst for education among 144 countries in a survey last year by the World Economic Forum.
Curro had made a “conditional firm intention offer” at 13 rand a share to Advtech’s board, which broke off talks last week after deciding a deal wasn’t in the company’s best interests. Advtech chairman Chris Boulle said on Tuesday that while it would be “irresponsible” for the board to recommend the offer, nothing precluded Curro from making a bid directly to investors.
Curro can’t proceed with a general offer to all Advtech shareholders at 13 rand a share “without being able to perform a limited due diligence to obtain more information to verify cost savings,” the company said in its statement on Wednesday. The offer price would have represented an 18 percent premium to Advtech’s closing price on June 24, the day before the company announced it received an unsolicited proposal.
Advtech shares declined 3.3 percent to 11.90 rand a share as of 3:33 p.m. in Johannesburg, valuing the company at 5.4 billion rand ($431 million). More than 2.3 million shares traded, almost five times the three-month daily average. The company’s two largest investors voted against the re-election of the company’s incoming chairman and another independent director at the annual general meeting on Tuesday, amid management opposition to the Curro proposal.
Also at Tuesday’s meeting, several parents whose children attend Advtech schools expressed support for the board amid their concern that a Curro takeover wouldn’t be positive for the company, citing differences between the two groups of schools.
Curro gained 0.9 percent to 34.50 rand, while the company’s controlling shareholder, PSG Group Ltd., rose 3.5 percent.