Ethics in Business - Abc Learning Case Study
Overview of the Business:
ABC Learning Ltd was an Australian provider of early child hood education services, founded in Queensland in 1988, that through its 18 centres was the largest single operator of early childhood education services in Australia by 1997. Led by founder Eddy Groves, ABC Learning Ltd continued to grow, through the opening of new centres and the acquisitions of rivals i.e. peppercorn Childcare in 2004 in which 450 centres were purchased for $340 million. “By 2008, ABC Learning was the largest provider of childcare, holding around 20 per cent of the long day care market and providing care to over 100 000 children” (Senate education, employment workplace relations committee, 2009).
In 2005 Mr Groves began an international expansion campaign through the acquisition of the United States based childcare operator; Learning Care Group Inc., expanding ABC Learning Ltd by a further 467 centres. The international growth continued with ABC learning acquiring La Petite Academy, in the United States, for USD$330 Million, and United Kingdom based Busy Bee Group Ltd, in 2006.
“In mid-December 2006, ABC’s share price hit its peak of $8.62, valuing the company at a staggering $3.4 billion and Groves’s personal fortune at around $300 million” (Thomson, 2008). But declining profit in the second half of 2007, down 42% to $37.1 million, saw the company unable to service its, then, $1.8 billion debt resulting in a margin call on shares held by Mr Groves and several board members. The company experienced a significant drop in share price, down 43% to $2.15. Trading in the company shares was suspended in early 2008, followed by the company going into receivership in November of 2008.
Who are the main players in this business case?
The primary player in the centre of the collapse of ABC Learning Ltd is the founder and CEO Mr Eddy Groves. Mr Groves is currently involved in a court case, in the Brisbane Magistrates Court, regarding claims of poor disclosure,
ABC Learning Ltd was an Australian provider of early child hood education services, founded in Queensland in 1988, that through its 18 centres was the largest single operator of early childhood education services in Australia by 1997. Led by founder Eddy Groves, ABC Learning Ltd continued to grow, through the opening of new centres and the acquisitions of rivals i.e. peppercorn Childcare in 2004 in which 450 centres were purchased for $340 million. “By 2008, ABC Learning was the largest provider of childcare, holding around 20 per cent of the long day care market and providing care to over 100 000 children” (Senate education, employment workplace relations committee, 2009).
In 2005 Mr Groves began an international expansion campaign through the acquisition of the United States based childcare operator; Learning Care Group Inc., expanding ABC Learning Ltd by a further 467 centres. The international growth continued with ABC learning acquiring La Petite Academy, in the United States, for USD$330 Million, and United Kingdom based Busy Bee Group Ltd, in 2006.
“In mid-December 2006, ABC’s share price hit its peak of $8.62, valuing the company at a staggering $3.4 billion and Groves’s personal fortune at around $300 million” (Thomson, 2008). But declining profit in the second half of 2007, down 42% to $37.1 million, saw the company unable to service its, then, $1.8 billion debt resulting in a margin call on shares held by Mr Groves and several board members. The company experienced a significant drop in share price, down 43% to $2.15. Trading in the company shares was suspended in early 2008, followed by the company going into receivership in November of 2008.
Who are the main players in this business case?
The primary player in the centre of the collapse of ABC Learning Ltd is the founder and CEO Mr Eddy Groves. Mr Groves is currently involved in a court case, in the Brisbane Magistrates Court, regarding claims of poor disclosure,
Bibliography: Senate education, employment workplace relations committee. (2009). Provision of childcare. Commonwealth of Australia 2009. ISBN 978-1-74229-185-7 Thomson, J. (2008). Five lessons from the spectacular fall of Eddy Groves. Smart Company. Retrieved From: http://www.smartcompany.com.au/Premium-Articles/Top-Story/20081106-Five-lessons-from-the-spectacular-fall-of-Eddy-Groves.html Thomson, J (2011). Groves pleads not guilty to criminal charges over ABC Learning Centres collapse. Smart Company. Retrieved from: http://www.smartcompany.com.au/legal/20110128-groves-pleads-not-guilty-to-criminal-charges-over-abc-learning-centres-collapse.html Walsh, L. (2010). ABC didn’t obey board – kept buying childcare centres. The Courier – Mail. 20.(4). Brisbane, Queensland.