ABC LEARNING CENTRES GOES GLOBAL – Feb 2006
Eddy Groves is going global. In just five years, the founder and chief executive of
ABC Learning Centers has transformed his company from a $25-million minnow to a
$2.3-billion giant with 700 child-care centers around Australia. Now he has the
United States child-care industry in his sights and wants to enter the primary school
education market in Australia.
In January, ABC finalised the $218-million purchase of the US child-care company
Learning Care, and it wants to make at least one more big acquisition this financial
year. Analysts are wary of ABC's move into the US, saying it increases its risk profile
greatly. Groves is not concerned. "I'm going to prove that an Australian can make it in
the US. Not too many people get to live a dream and then get to go out and live it
again. I'm ready to rock'n'roll."
ABC Learning announced the acquisition of Learning Care in November. Shares of
ABC Learning are up 17% since then and were trading at $7.34 on February 3.
Groves says he has watched the development of the American child-care industry,
which is about 15 times bigger than Australia's, for more than a decade. In 1994, he
began studying the New York Stock Exchange-listed Kinder Care as a model for
floating ABC Learning. "It was always something in the back of my mind. When I
visited the States, and I've done the trip 73 times, I would be looking at ... what was
happening, how many centers were out there and what was going on in the
marketplace."
Groves started talking to the management team at Learning Care, led by its president
and chief executive, Bill Davis, when he took over in 2002. The company had been
losing money, but the new management set about rebuilding the business. In 2004-05,
Learning Care recorded its first profit in five years, on net earnings of $US3.1 million.
Learning Care's share price rose from US50¢ at the start of November 2003 to
$US6.03 at the start of November 2005....