Curro Holdings, an operator of private schools in South Africa, is in talks to buy smaller rival Advtech to take advantage of demand for paid-for education in the nation, according to two people familiar with the matter.
Discussions are at an early stage and one hurdle could be Advtech management’s reluctance to sell the company, said the people, asking not to be identified because the deliberations are private. Since Advtech said on June 25 that it had received an “unsolicited proposal,” its stock has gained about 7% for a market value of R5.4 billion ($440 million).
Curro Chief Executive Officer Chris Der Merwe said he couldn’t comment beyond a June 12 statement that the company had entered negotiations, which didn’t provide further detail. Advtech interim CEO Frank Thompson declined to comment.
South Africa’s education system was ranked the fifth-worst among 144 countries in a survey by the World Economic Forum last year, increasing the attraction of private schooling for those who can afford it. The school pass rate for final-year students fell for the first time in five years in 2014 after changes to the curriculum system.
Advtech founder Brian Buckham, who retired from the board in 2010 after 23 years as a director, owns 5.2% of the company, while Thompson and chief operating officer Derek Honey own a combined 4.1%. They aren’t seeking a sale, one of the people familiar with the matter said, and may be able to influence other investors if they decide not to recommend the offer.
Curro, controlled by PSG Financial Services, said in February it planned to raise about R1.44 billion from debt markets and a rights issue to develop new schools and examine potential acquisitions. The shares have gained 18% this year, valuing Curro at R10.8 billion.
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