ASX stock of the day: 3P Learning (ASX:3PL) shares rocket on takeover bid

The 3P Learning Ltd (ASX: 3PL) share price is rocketing today, up 13.28%. Here's why this ed-tech company is in ASX investors' good books

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The 3P Learning Ltd (ASX: 3PL) share price is rocketing today, up 13.28% at the time of writing to $1.36 a share. 3PL shares closed at $1.20 yesterday, but opened at $1.38 this morning and climbed as high as $1.42, before trending lower to the current share price over the day.

But today's moves are just another good piece of news for 3P Learning shareholders. The share price was already up 42% year to date before today's jump and is now up 60% year to date, and up more than 100% since the lows, we saw in March. However, it's worth noting that 3P only hit the ASX boards back in 2014, and, as of today's share price, remains more than 40% below the company's IPO price.

So what is this learning company? And why has the 3P share price rocketed more than 12% today?

What is 3P Learning?

3P Learning describes itself as a "global leader in online education". The company offers a suite of learning resources "designed for schools and families", which cover spelling, literacy and numeracy. 3P Learning was founded back in 2005 and boasts some high-profile partners, including Microsoft Corporation (NASDAQ: MSFT), the British Educational Suppliers Association and Unicef.

The company offers a range of software programs that aim to assist students with reading, writing, spelling and mathematics. These include the flagship Mathletics program, as well as Readiwriter, Reading Eggs and WordFlyers.

The company is a truly global player. In its earnings report for the 2020 financial year, the company advised that it received 51% of its revenue from the Asia Pacific region, with 20% hailing from the Americas and 29% from Europe, the Middle East and Africa. In the same financial year, the company derived 69% of its revenue from 'mathematics' programs, and 31% from literacy programs.

Why are 3P shares rocketing today?

The company made an announcement to the markets this morning before open. This news was the 'receipt of a non-binding' acquisition proposal for 3P, launched by a private Indian tech company called Think and Learn Private Ltd (which apparently operates under the name BYJU). Think and Learn Private operates in a similar sphere to 3P Learning and "provides programs in the K-12 segment".

The proposal is for Think and Learn Private to acquire 100% of 3P Learning's shares for a price of $1.45 a share, to be paid in cash.

The board has yet to review or recommend the proposal to shareholders and notes that the proposal, "is subject to a number of conditions, including completion of satisfactory confirmatory due diligence within a 4-week period, a unanimous recommendation from the 3PL Board and entry into a scheme implementation agreement". Think and Learn Private will also have to obtain approval from the Foreign Investment and Review Board.

This isn't the first time 3P Learning has had a suitor at its door. Back in August, the company received another takeover bid, this time from private US company IXL Learning. That bid involved a $1.35 per share offer, (which has now been approved by the Foreign Investment and Review Board) which the board subsequently recommended, "in the absence of a superior proposal".

It seems 3P Learning shareholders now have just that. 

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. 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.

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