Navitas Limited (ASX: NVT) shares have entered a trading halt on the ASX this morning ahead of an update regarding the BGH Capital-led consortium involved in takeover talks with the company.
Why did Navitas request the trading halt?
Navitas requested the trading halt ahead of an expected announcement about discussions with the BGH consortium to be released before market open on Monday 25 March 2019.
The company's share price surged nearly 22% to $5.30 per share on 10 October 2018 after announcing that it had received an unsolicited, preliminary, conditional and non-binding proposal from the consortium led by BGH Capital and AustralianSuper.
There was a similar theme on 15 January this year when the company received a revised indicative proposal from the BGH consortium for $5.825 per share, which saw the share price surge a further 12.9% to $5.53 per share.
What else did Navitas announce this morning?
Prior to its shares entering a trading halt, Navitas announced that SAE Education Limited had successfully appealed the UK Supreme Court's decision regarding SAE UK's value-added tax (VAT) exemption status.
VAT is the UK's equivalent of Australia's goods and services tax (GST) and SAE UK won a unanimous decision that it was entitled to VAT exemption from May 2009 onwards.
Navitas CEO reacted to the news by saying the company was "delighted" with the ruling and that it enables private for-profit education providers like Navitas to be on a "level playing field" with public education providers in the UK.
As a result, Navitas expects to record a one-off contribution to FY19 after-tax profit of ~$5 million for VAT expensed in previous financial years.
This morning's update follows Tuesday's announcement that Navitas had signed an agreement with Queens College of the City University of New York (CUNY) to support its internationalisation strategy which provides for Navitas to operate a Global Student Success Program for Queens College (QC-GSSP) on its Queens, New York, USA campus.
The agreement provides for an initial 5-year term with potential extensions of the program for an additional five years pending results and means Navitas now has 11 partners in North America.
Is Navitas in the buy zone?
Despite offering a 70% franked, 3% dividend yield and boasting a market cap of ~$2 billion, I wouldn't be jumping into Navitas until after Monday's BGH consortium update.
The short-to-medium-term outlook for the Consumer Discretionary sector nor Navitas' competitors like G8 Education Ltd (ASX: GEM) isn't great, so I'd be looking at these top growth shares as an alternative returns booster in the meantime.
