The stock jumped more than 20% on a rejected takeover bid, which is usually a sign the market expects the buyer to raise, not walk away.
IDP Education's board rejected a raised takeover offer from Blackstone this week, calling the proposal "highly opportunistic" even as the company's own financial results have deteriorated sharply. Blackstone had increased its bid to A$2.50 a share, up from an earlier A$2.30, valuing the Melbourne-based company, co-owner of the IELTS English-language testing exam, at roughly A$694.7 million, or about US$493.9 million.
The board's rejection came despite a business that has been under real pressure: IDP's statutory net profit has fallen roughly 90% over the past two years to A$13.3 million in its most recent fiscal year, with revenue down about 23% and guidance for the current fiscal year calling for adjusted earnings before interest and tax of A$95 million to A$115 million, down from A$122.9 million. The board said Blackstone's offer "substantially undervalued" the company and failed to account for the earnings potential of a multiyear transformation program already underway.
IDP shares still jumped 20.7% to A$2.16 on the rejection, a one-month high, though still below the rejected A$2.50 offer. One analyst suggested Blackstone may need to offer as much as A$3.00 a share before the board grants access to detailed due diligence.
The market's reaction, a sharp rally on a rejected offer, is itself the signal worth reading here: investors are not treating the rejection as the end of the process, but as a bargaining position, betting that a determined sponsor that has already shown willingness to raise once will come back with a higher number rather than walk away from a company whose earnings, however weakened, still anchor a real testing and education-services franchise.