Motley Fool Australia

3P Learning share price explodes 22% on takeover bid

laptop computer with lid appearing like the paghes of a book representing online learning
Image source: Getty Images

The 3P Learning Ltd (ASX: 3PL) share price has this morning exploded higher after a takeover offer was released to the market. 3P Learning also released its full year results. The 3P Learning share price has smashed its 52-week high and is currently trading 22.4% higher at $1.34.

Takeover bid

This morning, it was announced that 3P Learning is set to be taken over by rival IXL Learning. IXL is a privately owned, global online learning player. Founded in 1998 and headquartered in California, it is active around the world and already has an existing presence in Australia.

Under the terms of the scheme, each 3P shareholder will receive cash consideration of $1.35 for every 3P Learning share held. The consideration values 3P Learning’s equity at approximately $189.0 million with an enterprise value (EV) of $166.7 million, implying an EV/EBITDA multiple of 11.4. The price represents a 23.3% premium to the last closing price. Furthermore the 3P Learning board is fully behind the takeover and suggests that shareholders vote in favour of the scheme.

Nevertheless, shareholders should note that the scheme is subject to certain conditions which must be satisfied before it is implemented.

How did 3P Learning perform in FY2020?

3P learning performed well in FY2020 despite the effects of the pandemic. The company managed to increase its revenue by 1% to $54.9 million despite challenging market conditions.

Revenue growth from licence sales was modest, as expected, with the Americas up 11% and Europe, the Middle East and Africa (EMEA) up 1%. Other revenue increased 12% due to an increase in copyright revenue.

Expenses were up 11% due to the increased average headcount in the Americas and increased product development to support the company’s growth agenda. As a result, NPAT was down $4.3 million to $1.6 million. Moreover, as a result of increased expenses, profit for the year was down 73.8% to $1.55 million.

In terms of the balance sheet, 3P Learning has cash of $27.1 million with no bank debt. 

FY2021 outlook

3P Learning has announced that it expects double-digit revenue and EBIDTA growth in FY21. The cost base is now set and the company is aiming to deliver revenue growth with increased operating leverage. This increased leverage is set to drive growth at high margins similar to other software-as-a-service (SaaS) businesses.

3P Learning CFO, Dimitri Aroney, was optimistic looking forward and stated:

“In FY2021 we expect the EMEA market to deliver strong revenue and EBITDA growth as a result of the deal with a National Ministry of Education in the Middle East. In the APAC market, we expect single digit revenue and EBITDA growth for the full year. In the Americas market, we expect continued market uncertainty due to funding challenges as a result of COVID-19 however there is a pipeline of enterprise opportunities with an expectation of licence revenue growth for the full year.”

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of February 15th 2021

Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Related Articles…

Latest posts by Daniel Ewing (see all)