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Curro may go hostile with R6bn bid for Advtech

Johannesburg - Curro Holdings [JSE:COH] said it is considering relaunching a R6bn takeover offer for rival Advtech [JSE:ADH], raising the prospect of a hostile bid.

Advtech's board rejected Curro's offer on Tuesday, saying it was not in the company's interests. Curro, however, said on Wednesday that Advtech's two biggest shareholders supported the bid.

A deal, if successful, could create an education company valued at more than R18.6bn with enough financial muscle to roll out more private schools.

Curro, in a statement, said it had the backing of Coronation Fund Managers and Kagiso Asset Management, Advtech's biggest shareholders, who together hold more than 35%.

"Curro is still contemplating whether to resubmit an offer, albeit in a potentially different format," Curro said in the statement.

Under the cash-and-share bid, which is at a 12% premium to Tuesday's closing price, Advtech shareholders were offered 1 share for every 2.59 they hold at R13 per share and at least 50% cash for those not willing to accept shares.

Advtech's shares climbed 5.2% in Johannesburg on news of a possible relaunch of the bid, to R12.20, still below the bid price. Curro shares closed down 0.6%.

Coronation, which has a 24% stake, told Reuters on Wednesday that it was disappointed that the board had not referred the offer to shareholders before rejecting it.

Kagiso Asset Management, in an emailed statement to Reuters, said the offer was a fair deal.

"Their offer represented a substantial premium to the prevailing market price of Advtech and, we believed, fairly valued Advtech’s operations and its exciting growth strategy," it said.

Advtech has not expanded its portfolio of schools at the same pace as Curro in recent years.

Both are betting on growing demand from parents unhappy with the public education system in Africa's second-largest economy, but Curro's share price has risen about seven-fold since listing in 2011, while Advtech's has only doubled over the same period.

"Advtech's conservativeness have cost them the very market they were dominant in," said Vunani Securities analyst Anthony Clark.



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