Moneycontrol BureauShares of Zee Learn and Tree House jumped 10 percent intraday on Friday as the sector seems to be gearing up for consolidation. The child development and education subsidiary of Zee Entertainment is planning to merge with preschool chain Tree House Education.
"Board of directors of the company today has accorded in-principle approval for exploring consolidation options with Tree House," Zee Learn says in its filing.
Umesh Pradhan, CFO of Zee Learn, in an interview to CNBC-TV18 says Zee has also constituted and authorised a committee to finalise proposed consolidation and take all necessary steps including appointment of necessary consultants.
Tree House, the country's leading educational service provider, has 720 self-operated pre-schools with spreading network to 103 cities in September 2015. Currently it is providing school management services to 24 K-12 schools in 3 states in India.
Its profit in the quarter ended September 2015 increased 1.2 percent year-on-year to Rs 12.74 crore with a 15.1 percent growth in revenue at Rs 57.25 crore but operating profit margin contracted 700 basis points to 52.7 percent due to 73 new centre openings in Q2.
Promoters of the company Geeta & Rajesh Bhatia sold 9.5 percent stake through block deals on Thursday. The stock has rallied more than 46 percent in four consecutive sessions since November 30.Zee Learn's stock has also surged more than 41 percent since December 2 ahead of this merger news announced today.
Zee Learn, which runs pre-schools chain Kidzee with more than 1350 operational pre-schools in over 550 cities across India and neighbouring countries in Asia, has reported a 5.3 percent year-on-year degrowth in profit at Rs 1.08 crore but revenue increased 34.6 percent to Rs 30.7 crore in September quarter 2015.
At 09:23 hours IST, the scrip of Zee Learn was quoting at Rs 45.95, up Rs 3.40, or 7.99 percent while Tree House Education rose 10 percent to Rs 222.60 amid high volumes.
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