AEC Education plc
Commenting on the acquisition, Liam Swords, Chairman, said
“I am delighted that we have reached agreement to acquire Malvern House. It is a well-established and highly regarded provider of educational courses, particularly English Language Learning courses, attracting foreign students on a global basis to its teaching colleges in Central London.
Currently, we do not have a presence in the UK and have been seeking a suitable acquisition. Malvern House represents a highly complementary fit with our existing operations. We already have a large student network in the Far East and demand for UK based study, especially in London, is strong and continues to grow. We see exciting opportunities to market Malvern House’s courses to our existing student base and build close links between our respective marketplaces.
We also look forward to Naresh Malhotra, managing director of Malvern House, joining the Board of AEC Education as we seek to capitalise on the growth opportunities available to the enlarged group.”
For further information, please contact:
AEC Education plc Liam Swords, Chairman +44 (0) 20 7448 1000 (today) +44 (0) 20 8308 1202 (thereafter) WH Ireland Limited (NOMAD & Broker) Adrian Kirk +44 (0)161 832 2174 Stuart Forshaw Biddicks Katie Tzouliadis/ Sophie Lane +44 (0)20 7448 1000
AEC Education is pleased to announce that it has reached agreement to acquire the entire issued share capital of Malvern House, the London-based educational courses provider, for a maximum aggregate consideration of up to £3,994,000 payable in cash together with the issue of 7,500,000 new Ordinary Shares at 12p per share (the “Acquisition”). An element of the consideration payable is dependent on Malvern House’s financial performance in the 12 months to 30 June 2009.
Founded in 1999, Malvern House, trading through its wholly owned subsidiary, Malvern House International Limited (“Malvern House International”), is a well-established and highly regarded provider of English Language Learning courses for foreign students as well as courses in Business Administration, Travel, Tourism, Hospitality and Foreign Languages. Malvern House operates three teaching colleges, in Central London, located in Piccadilly, Bloomsbury and Kings Cross, and has a reputation for high levels of service and pastoral care for its students. Its student population per annum totals some 6,000 students and the business is one of the leading international student recruiters in the UK, drawing students from over 90 countries, including from the Far East, South America, Western and Eastern Europe. Malvern House employs approximately 75 qualified teachers.
Malvern House teaches English Language Learning courses for non-UK nationals at all levels, from beginners onwards and is accredited by the British Council as well as being a member of English UK, the world’s leading English language teaching association. Its study programmes are flexible and can be tailored to the individual requirements of each student, depending on students’ study time, income and proficiency level. The average course length is six months but students may choose to study programmes lasting from one week to two years. Evening classes offering foreign language courses, including Mandarin, are also offered. Supporting its courses, Malvern House runs an extensive examination programme teaching International English Language Testing Systems and Cambridge Examinations.
In addition, Malvern House provides Diploma and Advanced Diploma level courses in Business Administration, Travel, Tourism and Hospitality, accredited by the Association of Business Executives, the professional membership body and examination board. For its business related courses, Malvern House runs London Chamber of Commerce and Industry Business Examinations. It also has well-established relationships with UK universities, enabling it to offer both Foundation courses and Pre-Masters courses for students wishing to prepare for University Undergraduate and Masters Degrees.
The audited accounts for the 12 months to 30 June 2008 show that Malvern House International, which conducts all operations, generated revenues of £6.06m and recorded a profit before tax of £626,000. Its net assets stood at £766,000 at 30 June 2008.
Following the completion of the acquisition of Malvern House, Naresh Malhotra, co-founder and managing director of Malvern House, will join the board of AEC Education as an Executive Director. A separate announcement containing full details of his appointment and information required under the AIM Rules for Companies is being issued today.
Reasons for the Acquisition of Malvern House
The acquisition of Malvern House is in line with AEC Education’s strategy to build critical mass and accelerate the Company’s growth opportunities by combining strong organic growth with synergistic and easily integrated acquisitions. In particular, AEC Education has been seeking a complementary acquisition in the United Kingdom where it currently does not have a presence.
The addition of Malvern House will enable AEC Education to benefit from the strong demand for London-based English Language and Business courses within its existing operations in the Far East. Currently, the Company has over 13,000 students enrolled on its courses in the Far East, with more than 110,000 examinations taken in 2008. The Directors of AEC Education believe that there are significant cross-selling opportunities between AEC Education and Malvern House as well as opportunities to share knowledge and their respective marketing platforms.
Terms of the Acquisition
The maximum aggregate consideration for the acquisition of Malvern House is up to £3,994,000, payable in cash together with the issue of 7,500,000 new Ordinary Shares at 12p per share. The consideration comprises the following payments:
Admission of Consideration Shares to Trading on AIM
Application has been made for the Consideration Shares to be admitted to trading on AIM and dealings are anticipated to commence on 7 July, 2009. On admission, the Company will have 39,092,146 Ordinary Shares in issue.
Certain recipients of Consideration Shares, including Naresh Malhotra, have agreed not to dispose of any interest in the Ordinary Shares received pursuant to the Acquisition for a period of 24 months.
The disclosable interests in Ordinary Shares of the Company pursuant to the Acquisition are as follows: