G8 Education has admitted defeat in its attempted takeover of fellow childcare operator Affinity Education after private equity firm Anchorage Capital Partners trumped its offer.
G8 made a $185 million cash and scrip offer in August, but Affinity urged its shareholders to reject it, saying it was opportunistic and undervalued a company that operates 161 childcare centres.
Affinity also revealed the existence of a larger $208.3 million cash bid from Anchorage.
G8 has now agreed to sell its 19.89 per cent stake in its smaller rival after Anchorage made an improved $213 million offer, raising it from 90 to 92 cents per share.
Anchorage must announce financing details by Monday and Affinity shareholders can vote on whether to approve the deal at a November 20 meeting.
The takeover should be complete by December.
Affinity shares gained three cents, or 3.5 per cent, to 89.5 cents, while G8 dropped one cent to $3.32.
