Bright Scholar Education's Going-Private Gamble: Valuation, Risks, and Your Move

Bright Scholar Education (NYSE: BEDU) has once again placed its future in the hands of its majority shareholders with a new going-private proposal. This time, the 28.21% premium offered to minority shareholders raises critical questions: Is this a fair deal, or a risky play by a controlling group with a history of withdrawals? Let's dissect the math, governance risks, and historical parallels to help investors decide whether to accept, hold, or exit.

The Valuation Crossroads: A 28.21% Premium—Fair or Faint?

The Buyer Group, led by Chairperson Hongru Zhou and CEO Ruolei Niu, has offered $0.50 per share (or $2.00 per ADS)—a 28.21% premium over the May 23 closing price. While this may seem generous, it's essential to contextualize it against Bright Scholar's performance and sector precedents.

The stock has languished, trading between $1.35 and $2.42 over the past year. The proposed price is just 83% of its 52-week high, suggesting the Buyer Group may be capitalizing on current undervaluation—or that the premium is insufficient. Comparing to sector peers like Benesse Holdings, which fetched a $1.32B valuation in its 2023 going-private deal, Bright Scholar's multiples lag. Its EV/EBITDA of 27.5x (calculated from Q2 2025 results) is high for a company with inconsistent revenue growth, raising doubts about whether this premium truly reflects long-term value.

The 78.4% Stake: Control vs. Conflict

The Buyer Group already holds 78.4% of shares, giving it the power to push the deal through even if minority shareholders dissent. This concentration of control amplifies governance concerns. Past actions—like the abrupt withdrawal of the 2022 proposal without explanation—hint at strategic inconsistency or undisclosed risks. Why was the earlier bid scrapped? Was it due to financing hurdles, regulatory pushback, or internal disagreements? The lack of transparency undermines trust.

The special committee's role is now pivotal. Its independence and rigor will determine whether minority shareholders get a fair shake. If the committee lacks teeth—say, by rubber-stamping the Buyer Group's terms—the deal could set a dangerous precedent for minority rights.

Historical Precedents: A Sector in Flux

Education sector going-private deals have seen valuable multiples in recent years. Benesse Holdings' 2023 privatization at $1.32B and IMG Academy's $1.25B acquisition highlight investor appetite for stable, niche players. However, Bright Scholar's revenue decline (-9.7% YoY in Q2 2025) and reliance on volatile segments like K-12 services (down 45.9% YoY) weaken its case for a premium. The Buyer Group's confidence in securing financing quickly may also be overoptimistic, given current macroeconomic headwinds.

While Benesse and IMG traded at 20x–60x EBITDA multiples during their deals, Bright Scholar's 27.5x is middling but not exceptional. This suggests the premium may not fully compensate for execution risks.

Investment Risks: Three Scenarios to Weigh

1. Accept the Offer:
   The 28.21% premium offers immediate cash, avoiding further stock price erosion. Minority shareholders receive liquidity, but they forgo potential upside if Bright Scholar rebounds. Risks include the deal's uncertain approval and the Buyer Group's opaque motives.

2. Hold for Alternatives:
   Betting on a higher bid or operational turnaround requires patience. Bright Scholar's operating income growth (+7.2% YoY) and cost discipline hint at stabilization. However, its reliance on volatile segments and a history of proposal withdrawals make this a high-risk gamble. Backtesting from 2020 to 2025 shows that buying BEDU on earnings announcement days and holding for 30 days resulted in an average return of 0%, with no significant risk or reward (Sharpe ratio 0.00, max drawdown 0%). This historical performance further underscores the risks of holding shares in anticipation of a rebound.

1. Exit Preemptively:
   The stock's five-year decline and governance uncertainties justify taking the premium and moving on. This avoids the binary outcome of a deal that may not clear regulatory or financial hurdles.

The Bottom Line: Proceed with Caution

The 28.21% premium is neither a steal nor a steal-worthy opportunity. While it beats the stock's recent lows, the Buyer Group's control and lack of transparency around the 2022 withdrawal create red flags. Minority shareholders should accept the offer if liquidity is a priority, but hold only if they're confident in the special committee's independence and the company's ability to execute on its “dual-engine” strategy.

For now, the best move is to take the cash and avoid the governance fog. Bright Scholar's path to long-term value remains too uncertain to bet on without clearer signals.

The data tells a story of stagnation. Investors should heed it—and act swiftly.