Nichii Gakkan, a medical / education business has confirmed that it intends to purchase shares of the English conversation school chain Gaba in an attempt to bolster its education business. The company plans to spend up to 10 billion yen (around 127 million dollars) to make Gaba a wholly owned subsidiary. Nichii said it will buy at least the 26,390 shares owned by Gaba's main shareholder, Daiwa Corporate Investment Co. It set no maximum number of shares that it will purchase.
The offer price of 200,000 yen per share is a 53% premium over Friday's close. The board of Gaba, a company listed on the Mothers section of the Tokyo Stock Exchange, has agreed to the move.
Or if you're interested in an alternate title, "Gaba cashes in its chips." I think if I were offered a 53% premium on shares that are worth less than half of their initial value in a moribund industry, I'd be tempted to get rid of them.
This bit caught my eye:
Even though its offerings have expanded beyond its mainstay preparatory courses for medical and nursing licenses, it is still struggling. The firm expects the Gaba brand to help it win contracts for corporate English training and to expand its online offerings."
A look at Nichii Gakkan's English lessons shows that they offer the standard range of TOEIC lessons and survival English for travelers. Moreover, it looks like the lessons are presented in some sort of e-learning Flash format with cheap-looking animations. I wonder what the attraction is given who widespread ultra-cheap lessons via Skype are these days?
What value does Nichii Gakkan see in the Gaba brand? Is it really that strong? What know-how does Gaba have other than its list of business clients, and is it worth paying 10 billion yen for that? One wonders...