G8 Education, which lobbed a $162 million takeover bid for smaller rival Affinity Education Group last week, had offered before to buy its smaller rival at a far higher share price, sources have told Fairfax Media.
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At the time of the first meeting on April 24, which was attended by the chairmen and chief executives of the two childcare operators, G8 proposed a nil premium merger that would have involved G8 paying $1.10 per Affinity share, sources with knowledge of the meeting said.
The latest bid, which Affinity chairman Stuart James has rejected as "opportunistic and highly conditional", is based on a share price of 69¢.
It is understood Affinity said it would consider the proposal and both parties agreed to meet again on June 24.
Sources said that at the next meeting G8 proposed another nil premium merger but revised its bid down to 82.5¢. A ratio based on a spot or 30-day volume-weighted average price basis was used to work out the price. On June 25, Affinity's board decided to reject the G8 bid, arguing that it was inadequate.
It is believed that Affinity said it would be prepared to continue discussions with G8 but only if the offer was revised up. G8 Education said it would respond to Affinity before July 4.
However, last Thursday, on July 2, G8 bought 38 million shares in Affinity at 70¢ each, a 16.4 per cent stake in the company. G8 said on Friday it would offer one share in G8 for every 4.61 shares in Affinity.
Affinity shares had plummeted to 54¢ on Thursday, after the company downgraded its earnings guidance, allowing G8 to swoop, after the stock had traded consistently above 80¢ in the weeks before.
G8 closed on Friday at $3.18 – a 12-month low – down 2.4 per cent from the previous day's $3.25.
The two parties did not respond to requests for comment on Sunday.
Affinity has rejected G8's bid.
"The board of Affinity considers this unsolicited approach to be highly opportunistic and the proposal highly conditional. Shareholders are strongly advised to take no action in relation to G8's announcement," Mr James said.
But on Friday G8 chairwoman Jenny Hutson described the offer as sensible and logical for the industry and her company.
G8 is the country's largest for-profit childcare operator, with 450 sites and spots for more than 35,000 children every day. Affinity has 161 centres and about 12,000 places.
