Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

Cambian agrees to be taken over by CareTech for up to £372mln

Analysts at Liberum believe the value of Cambian is "meaningfully greater" than what CareTech has offered for the firm but they see the benefits of the proposed merger
children
CareTech is looking to expand its childcare business

Cambian Group PLC, a provider of education and behavioural health services for children, has agreed to be taken over by CareTech Holdings PLC (LON:CTH) in a deal that could be valued up to £372mln.

CareTech, which offers social care services, has been in talks with Cambian since July as it seeks to expand its child care business.

It is offering cash-and-stock or all cash for Cambian. The cash and stock deal includes 0.267 new shares and 100p in cash for each Cambian share held, representing a total value of 200p per share or £372mln.

Under the all-cash offer, CareTech will pay 190p for each Cambian share. Cambian’s closing share price on Wednesday was 190.5p, which values the group at £353mln. 

Bid lower than first offer

The latest proposals are below CareTech’s first bid in July, which was 220p per share in cash and stock or 200p per share in full cash.

READ: Cambian jumps after around £405mln takeover proposal from social care services rival CareTech

CareTech said it expects the deal to create pre-tax cost synergies of about £6mln per year by 2021.

“The financial rationale for the Transaction is compelling in its potential to generate value for both CareTech shareholders and Cambian shareholders,” said CareTech chairman Farouq Sheikh.

“At the same time, the larger size of the enlarged group means that more funds will be made available to the CareTech Charitable Foundation to accelerate its important work in giving back to the most disadvantaged communities.”

Shares in Cambian rose 1.8% to 194p in mid-morning trading while CareTech edged up 0.7% to 377p.

Liberum sees benefits of enlarged group but downgrades Cambian 

Liberum downgraded Cambian to a 'hold' rating from 'buy' and cut its target price to 200p from 238p.

“In sum, while we clearly believe the value of Cambian is meaningfully greater (previous target price £2.38) than that agreed today, we expect this deal to be completed (subjected to competition authority approval) and can see the attractions of the new combined entity,” said Liberum.

View full CMBN profile View Profile

Cambian Group Timeline

Related Articles

cholesterol on a dial
September 24 2018
"The formation of ProBiotix Health and appointment of Adam Reynolds as chairman continues a successful strategy of building value in each division which is materialised by forming separate legal entities and taking them to a public listing,” said chief executive Stephen O’Hara
picture of addict
November 15 2017
To build the UK's first £1bn, self-sustainable biotech is the aim for chief executive Clive Dix
Widecells
September 27 2018
WideCells has undertaken a review of the business to deliver a strategy that will generate revenue, reduce overheads and achieve profitability

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use