BRIGHTPATH EARLY LEARNING INC V.BPE

Good sized acquisition annouced

[Method]

A good sized acquisition announced today for all cash (i.e. debt) based in Ontario. Not a lot of financial details except to say it will be accretive.

[FreeCheez]

I've never heard of an announced deal where they said in the news release that the deal would not be accretive, lol. Doesn't mean this wont be just that saying that mentioning its accreitve without mentioning figures is meaningless. 

[DanielDarden123]

While details are lacking, given that there is no dilution, I would be shocked if this Board approved this without significant accretion to holders. Shows the value of a strong balance sheet which should continue to be strong post closing. Debt goes up but so does equity so ratio should be similar.

[pierrelebel]

"without significant accretion to holders"  Accretion will exist IF the net profit generated by the acquired Ontario centres exceed the interest cost of the $22,000,000 borrowed for the acquisition. The net profit from the acquisition would have to exceed $1.1 million a year for us to see $0.01 share profit. Nice geographical diversification but it may be a while before we see

[hrgoyal]

From the web site of Peekaboo (https://peekabookid.com/) and BPE, I noticed that the supervisor to kid ratio is not same for both. Peekaboo for infant 3 supervisor for every 10 and BPE 1 supervisor for every 3. In case of infant Peekaboo 1 adult for 5 while BPE it 1 for 4. BPE has not provided children to adult ration for other age groups. BPE has to spend money to bring Peekaboo to its standard

[Method]

Not too much information to go off of now but one thing I think for sure is that BPE will be selling more real estate to reduce debt they have taken on in this transaction. This should be constructive for valuation. It's almost like a public LBO at this point so the leverage to the equity is giant depending on the accretion.

[pierrelebel]

Skeptical, are you?  "I've never heard of an announced deal where they said in the news release that the deal would not be accretive, lol." Take a look at the announcement today by CIBC buying an American outfit for $4.9 billion.  They stated that earnings per share will be down because of the acquisition.  It will be three years before they make new money on this