Why Nord Anglia Education Inc. Jumped 18% Tuesday Morning

By Anders Bylund Markets Fool.com

What happened

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Shares of private school system operator Nord Anglia Education (NYSE: NORD) jumped as much as 18.5% higher in Tuesday's morning session.

So what

A consortium of private equity firms, led by the Canada Pension Plan Investment Board and Baring Private Equity Asia, is taking Nord Anglia private in a $4.3 billion all-cash deal. The buyout price represents an 18% premium over Nord Anglia's share price as of Monday night, and a 33% increase over the stock's three-month average pricing.

Image source: Nord Anglia.

Now what

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Unanimously approved by the company's board of directors, the deal is still subject to the usual set of closing conditions, including a vote by Nord Anglia shareholders. However, share prices immediately shot right up to the proposed takeout price of $32.50 per share. Investors are acting as if the ink were already drying on the final John Hancock, leaving little room for improvement unless the company can drum up a bidding war.

But that's an unlikely scenario given that Nord Anglia shares have soared 50% higher in less than six months. The stock trades at 62 times trailing earnings and 21 times EBITDA profits, so the bidding consortium is already willing to pay a stiff premium for the company.

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Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.