Analysts unimpressed as Learning Technologies agrees £802m takeover

AIM-listed Learning Technologies has finally agreed an £802m acquisition by a US private equity firm after a lengthy search.

The digital learning and talent management group’s board has agreed to a 100 pence per General Atlantic share offer, reflecting a handsome 34 per cent premium to Learning Tech’s share price before interest kicked in. of the offer in September.

But the price is at a significant discount to Learning Tech’s all-time high of 236p set just three years ago, while the finer details of the deal have raised eyebrows among some analysts.

Broker Shore Capital said it was “unimpressed” and “surprised by the board’s recommendation,” adding that “this is exactly the wrong time to sell the business.”

Learning Tech, which serves corporate and government clients, has seen its share price and revenue suffer from its 2021 highs amid a tougher environment for corporate spending.

Shore Capital said it anticipates “both an improvement in trading and a reduction in the ‘complexity discount’ in the coming years.”

He wrote earlier this year: ‘LTG is a company with high recurring revenues and operating margins close to 20 percent, and has been ranked as a ‘Strategic Leader’ in Digital Learning for eight consecutive years.

“Management has a track record of great success in acquiring and enhancing operating assets.”

Under the terms of the deal, investors were also offered an alternative option of purchasing shares in the unlisted private equity firm, an option that Learning Tech Chairman Andrew Brode and CEO Jonathan Satchell , who collectively own 24 percent of the firm, have opted to carry.

However, the option is not open to some shareholders, such as investment funds with a mandate that prevents them from owning unlisted companies.

Shore Capital said: ‘In our view this sums up why this is a poor offer for the remaining shareholders whose mandates prevent them from owning unlisted shares.

“Ultimately, the two largest shareholders have not been offered enough cash to part with the opportunity they perceive in the future.”

General Atlantic, which also owns edtech companies such as Duolingo and Unacademy, said Learning Tech would require more investment to adapt to a changing landscape and compete.

Analysts at Peel Hunt said: “While we don’t think this is a fire sale price for the business, it may take a long period for the shares to recover on a standalone basis.”