IXL Learning’s acquisition of Mathletics owner 3P Learning is expected to be followed by similar moves in the industry, with some watching what happens to Education Perfect with great anticipation.
The software company was acquired by private equity firm Five V Capital, backed by former CVC Capital Partners executive Adrian MacKenzie.
It is similar to 3P Learning but bigger and some estimate that it could be offloaded for between $300m and $500m.
Such targets remain in the sweet spot for private equity firms right now, and also some strategic investors.
They are groups in strong demand at a time that online learning becomes more essential amid the COVID-19 environment and are resilient to the economic impacts of the coronavirus.
Buyout funds are said to be hard at work right now scanning the market for businesses that are undervalued but well placed to weather the current economic storm.
The privately held IXL is offering $188.3m for 3P Learning.
While it is being offloaded for far less than the a $337m it floated at in 2014, the understanding is that since then the business has lost its way and is in the process of being restored to a stronger performer.
The California-based acquirer has the capability to invest in the operation to ensure this occurs.
The digital learning company supports personalised learning in maths, English, arts, science, social studies and Spanish for more than 10 million students.
It has tapped Luminis Partners for the acquisition, along with law firms King & Wood Mallesons and Latham & Watkins.
3P Learning called on Allier Capital and law firm Gadens for advice.
IXL’s core product offerings include IXL, ABCya, Education.com, Vocabulary.com, Quia Web and Quia Books.
The $1.35 per share offer announced on Friday is by way of a scheme of arrangement.
It is at a 23.3 per cent premium to Thursday’s last closing price of $1.10.
The deal has received backing from Sam Weiss, the chairman of 3P Learning, whose products also include Readiwriter, Reading Eggs, Mathseeds, Word Flyers and Stemscopes Science.
Last financial year, 3P Learning generated $55.1m in revenue and $14.6m in underlying earnings before interest, tax, depreciation and amortisation.
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