UCW (ASX:UCW) makes a play for RedHill Education (ASX:RDH)

• Tertiary education business group UCW (UCW) has put out an unsolicited bid for ASX-listed RedHill Education (RDH)
• At 4.5 shares in UCW for every 1 RedHill share, the offer values the latter company’s float at 79 cents apiece
• If the offer were to be accepted, RedHill holders would take majority ownership of the combined group, at 66 per cent
• In response to the offer, RedHill has asked shareholders to “take no action”, while it compiles a target’s statement, which is expected to drop in mid-January
• RedHill Education closed 0.62 per cent up for 80 cents per share, while UCW closed in the grey at 20 cents per share

Tertiary education business group UCW (UCW) has put out an unsolicited bid for ASX-listed RedHill Education (RDH).

UCW, which currently owns Australian Learning Group and Proteus Technologies, is proposing a share-for-share deal to acquire RedHill and its roster of private tertiary education businesses.

In a public release, UCW Chairman Gary Burg said the combination aims to preserve value for both sets of shareholders by providing access to cost-savings not available to either entity on a stand-alone basis.

“The scale benefits should allow the combined group to take advantage of the tailwinds in the domestic student market, and to benefit from the recovery of the international student market, once the Australian international border re-opens and market conditions stabilise,” he added.

At 4.5 shares in UCW for every 1 RedHill share, the offer values the latter company’s float at 79 cents apiece. UCW’s offer represents a slight discount on RedHill’s most recent close and an even more substantial discount on its pre-COVID trading levels.

Last year, RedHill’s shares reached a height of around $2.50 but have been trending steadily down ever since. The onset of the COVID-19 pandemic and its accompanying economic downturn accelerated RedHill’s share price decline, which fell to a low of 43 cents per share by August.

Despite the downturn, RedHill shares have been back on the rise in recent weeks, with vaccine buoyancy shooting the company back up to around 80 cents apiece.

With so much price volatility in RedHill’s recent past, whether the buyout valuation is well priced remains unclear.

If the offer were to be accepted, RedHill holders would take majority ownership of the combined group, at 66 per cent.

In response to the offer, RedHill has asked shareholders to “take no action”, while it compiles its own target’s statement, which is expected to drop in mid-January. The offer is expected to close by January 29.

RedHill Education closed 0.62 per cent up for 80 cents per share, while UCW closed in the grey at 20 cents per share.