Analysts are unimpressed as Learning Technologies agrees to an £802m takeover
- Digital learning company agrees to 100 cents per share deal – it was valued at 236 cents in 2021
- The chairman and the CEO accept an alternative offer, but others cannot
AIM-listed Learning Technologies has finally agreed to an £802 million takeover by a US private equity firm after a protracted pursuit.
The digital learning and talent management group’s board agreed to an offer of 100 pence per share from General Atlantic, reflecting a 34 percent premium to Learning Tech’s share price before the bidding rate that started in September.
But the price is significantly lower than Learning Tech’s all-time high of 236p just three years ago, while the finer details of the deal are raising eyebrows among some analysts.
Broker Shore Capital said it was “unimpressed” and “surprised by the board’s recommendation,” adding “this is exactly the wrong time to sell the company.”
Learning Tech, which provides services to corporate and government clients, has seen its share price and earnings suffer since the highs of 2021 amid a tougher corporate spending environment.
Shore Capital said it expects “both an improvement in trading and a reduction in the ‘complexity discount’ in the coming years.”
Peel Hunt analysts said the 100 cent deal was not a ‘knockout price’, while Shore Capital said it was ‘unimpressed’
It wrote earlier this year: ‘LTG is a company with high recurring revenues and operating margins of nearly 20 percent, and has been ranked as a ‘strategic leader’ in digital learning for eight consecutive years.
“Management has a very successful track record of acquiring and improving assets.”
Under the terms of the deal, investors were also offered an alternative option to take shares in the unlisted private equity company – an option. Learning Tech chairman Andrew Brode and CEO Jonathan Satchell, who jointly own 24 percent of the company, have chosen to take.
However, this option is not open to some shareholders, such as investment funds with a mandate that prohibits them from holding unlisted companies.
Shore Capital said: ‘We believe this reflects why this is a bad offer for the remaining shareholders whose mandates prevent them from holding unlisted shares.
“Ultimately, the two largest shareholders did not get enough money to relinquish their perceived future opportunities.”
General Atlantic, which also includes education technology companies such as Duolingo and Unacademy, said Learning Tech needs further investment to adapt to a changing landscape and compete.
Analysts at Peel Hunt said: ‘While we don’t believe this is a knockout price for the company, it could take a longer period for the shares to bounce back on a standalone basis.’
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