- 3PL shareholders have rejected a $1.35 per share offer by IXL Learning for the acquisition of 3P Learning at a scheme meeting.
- Largest shareholder Viburnum Funds has proposed a merger with Blake eLearning Pty Ltd. After the potential merger, 3PL would remain listed on ASX.
- The proposed merger is valued at $188 million, which would be paid 90% in scrip and 10% in cash.
Ed-tech business 3P Learning Limited (ASX:3PL) has been amidst a takeover battle from bidders. In the latest development, the largest shareholder – Viburnum Funds – has come out with an alternative proposal, which it believes would deliver ‘substantially more value’ to shareholders.
Last week, a scheme meeting was organised by the company that saw shareholders rejecting the proposal by IXL Learning, Inc. to acquire 3P Learning at $1.35 per share.
Also, this bid for the Australian ed-tech business was hijacked by Think and Learn Private Limited, an Indian ed-tech business operating under the brand name BYJU’S. The bid was revised to $1.50 per share by BYJU’S, however, it has been rejected by Viburnum Funds.
Proposed Merger with Blake eLearning
Viburnum has given correspondence for an unsolicited proposal from Blake eLearning Pty Ltd related to a potential merger between Blake and 3PL. The Board is assessing the merger proposal while also complying with the Scheme Implementation Agreement with IXL Learning, Inc.
The merger proposal has a purchase price of $188 million for 100% shares in Blake eLearning. The consideration would be 90% in 3PL shares and 10% in cash, amounting to $18.8 million.
The issue of shares to Blake would be valued at $1.35 per share, which is same as the IXL offer. Under the proposed share consideration, 3PL would issue around 125 million shares to Blake, accounting for 47% of the combined entity.
It has also been suggested that Blake Founder Matthew Sandblom would be appointed as the Chairman of the combined entity along with other Board changes.
The largest shareholder intends to keep the company publicly listed on ASX, and it has proposed a transformation strategy along with the merger with Blake eLearning.
Blake is a high margin, fast-growing and complementary business. 3PL and Blake are known to each other because of an existing distribution arrangement for Blake’s Reading Eggs and Mathseeds products.
According to Viburnum, the combined entity could potentially generate a proforma revenue of $110 million and proforma EBIT of $38 million. It also highlighted that if 3PL’s capitalisation strategy is applied to the combined entity, it would give proforma EBITDA of $56 million.
Viburnum noted that discussions with Blake shareholders were also conducted regarding a potential combination of the two entities. Blake eLearning has also urged the 3PL Board to assess the proposal and enter negotiations to execute agreements.
The letter by the largest shareholders highlighted that Blake eLearning had grown revenue by around 30% per annum over the past three years. The business has also demonstrated the ability to operate profitably.
For the year ending 30 June 2021, Blake eLearning is expected to generate a revenue of around $41 million and EBIT of $10-12 million, after incurring $10-12 million of R&D costs.
On 23 November 2020 (AEDT 12:29 PM), 3PL traded at $1.385, up by 0.727% from the previous close.