The 3P Learning Ltd (ASX: 3PL) share price is going nuts today after the company released its FY20 results and subsequently revealed a takeover proposal.
3P Learning is a software-as-a-service education business that provides learning resources designed for schools and families.
The company’s software suite includes Mathletics, Readiwriter, and STEMscopes Science. As their names suggest, these learning resources cover mathematics, literacy and science.
Key points from 3P Learning’s FY20 report
3P Learning attributed the decline in underlying EBITDA to increased spend on sales and marketing resources in the Americas region, as well as increased product development headcount.
Positively, customer retention improved in the Asia Pacific and Europe, the Middle East and Africa (EMEA) markets. The company said this was due to recent product content and platform improvements resonating with both teachers and students. However, the Americas market has been impacted by funding uncertainties caused by COVID-19.
3P Learning’s takeover offer
In a surprise twist, 3P Learning revealed it has received a takeover proposal. The company has entered into a scheme implementation agreement with Californian-based IXL Learning, under which IXL will acquire 100% of the share capital of 3PL.
If approved, each 3P Learning shareholder will receive $1.35 cash for every share held. This represents a 23% premium to 3P Learning’s last closing price of $1.095.
The offer values 3P Learning at an enterprise value of $166.7 million, implying an EV/FY20 EBITDA multiple of 11.4 times.
3P Learning’s board unanimously recommends shareholders vote in favour of the scheme, highlighting the attractive and significant premium of the offer and attractive valuation multiple.
Commenting on the takeover proposal, 3PL chair Sam Weiss (who is also the chair of Altium Limited (ASX: ALU)), said: “After careful consideration the Board has come to the unanimous conclusion that the Scheme is in the best interests of our shareholders.”
“The Scheme provides 3P Learning shareholders an opportunity to realise certain and immediate value for their shares, at a significant premium to recent trading and at an attractive valuation multiple. We are pleased that a leading industry player such as IXL has recognised the strategic value of our company.”
What now?
The takeover is subject to a number of conditions, including approval from 3P Learning shareholders, the court and the Foreign Investment Review Board.
Shareholders will receive a scheme booklet relating to the proposed takeover in due course. They will then have the opportunity to vote on the scheme. Subject to all conditions being satisfied, 3P Learning expects the scheme to be implemented by early December 2020.
At the time of writing, the 3P Learning share price has rocketed more than 22% to $1.34, just below the $1.35 offer.
To stay up to date on the latest reports and announcements, check out Rask Media’s ASX reporting season page.
