Friday, March 02, 2007

T. Rowe Price Opposes Laureate (LAUR) Takeover

T. Rowe Price (Nasdaq: TROW), an 8.1% holder of Laureate Education (Nasdaq: LAUR), filed a 13D today opposing the recently proposed going private transaction. NOTE: Recently Select Equity Group came out against the deal.

From the Letter:

We are writing on behalf of our advisory clients, who are shareholders of Laureate Education, Inc. (LAUR), to express our opposition to the recently proposed going-private transaction involving LAUR. T. Rowe Price Associates, Inc. (T. Rowe Price) is a registered investment adviser with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940 with discretionary authority over the securities holdings of our clients, including the T. Rowe Price mutual funds. Our mutual funds and other clients hold over 4.2 million shares, representing more than 8% of Laureates outstanding common stock as of December 31, 2006. We have been long-term shareholders of LAUR, having held LAUR (or its predecessor) in a variety of client accounts since 1995.

As you are aware LAURs Chairman and CEO, Doug Becker, together with a group of private equity firms, have proposed to take LAUR private in a cash transaction for $60.50 per share. We believe the proposed offer price is significantly below the true long-term value of the company and urge the board to reconsider its acceptance of the offer. T. Rowe Price intends to vote against the proposed transaction as, in our opinion, it is not in our clients best interests. We prefer to see LAUR continue to operate as a public company so that all existing shareholders can benefit from LAURs excellent long-term growth prospects.
It is our opinion that the long-term fair value of LAURs business is significantly above the proposed buyout price.
LAUR management itself has publicly confirmed a projection of $5.00 per share in earnings by 2010. This projection implies a near doubling in LAURs stock price to $110 per share over the next three years even if the stocks 2007 price earnings multiple prior to the announcement of the proposed transaction is simply maintained. Thus, we believe the proposed offer price of $60.50 is unfair to current shareholders because it does not take into consideration this future growth potential and only represents a modest premium to the prevailing market price.

Labels: , ,


Post a Comment

<< Home