What is the real cost of the Sterling acquisition for G8 Education (GEM)

James Marlay

Livewire Markets

What is the real cost of the Sterling acquisition for G8 Education (GEM)? Earlier this week G8 announced the acquisition of Sterling Early Education for a consideration of $228million. For many investors GEM has looked attractive due to its rapid growth and ability to successfully reinvest earnings. Equally, however, the failure of ABC Learning is still fresh in investors minds. GEM have been very deliberate communicating their discipline when it comes to acquisitions, saying they would not pay more than 4x EBIT for new centres. The latest transaction has been done at nearly 5.8x EBIT - raising a number of eyebrows in the investment community. So whilst the transaction value is $228million it is hard to quantify what the real cost to management will be. I spoke with Justin Braitling from Watermark Funds yesterday and he gave me a very candid response on the matter.


2 topics

James Marlay
Co Founder
Livewire Markets

Livewire is Australia’s #1 website for expert investment analysis. We work with leading investment professionals to deliver curated content that helps investors make confident and informed decisions. Safe investing and thanks for reading Livewire.

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.


Sign In or Join Free to comment