2U, Inc. (TWOU) stock rises 21% on Byju’s US$1-bn buyout offer

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2U, Inc. (TWOU) stock rises 21% on Byju’s US$1-bn buyout offer

 2U, Inc. (TWOU) stock rises 21% on Byju’s US$1-bn buyout offer
Image source: © Stanciuc | Megapixl.com

Highlights:

  • 2U Inc. provides educational technology services to nonprofit colleges and universities. 
  • The TWOU stock declined 55.57% YTD.
  • India-based online education portal Byju’s has offered to buy 2U Inc. for US$1 billion.

The 2U, Inc. (NASDAQ: TWOU) stock surged more than 21% on Wednesday after the India-based online education company Byju’s offered to buy it for US$1 billion in an all-cash deal.

The TWOU stock was up 21.56% to US$11.305 at 10.00 am ET after the news.

Bloomberg on Wednesday, citing a person familiar with the matter, reported that Byju’s offered the 2U board US$1 billion, or US$15 per share, to acquire the company last week.

The offer gives the Lanham, Maryland-based company an enterprise value of US$2 billion.

According to the report, Byju's was also in talks to acquire Chegg Inc., but discussions didn't progress. It added that the 2U deal is not finalized yet, and the board could still reject its offer.

Byju’s plans to expand globally and has already secured over US$2.4 billion to finance deals. Bloomberg added that Byju’s, a major startup in India, could be worth around US$22 billion.

The platform has around 115 million students, with seven million annual subscribers. 

On the other hand, 2U Inc., an education company, provides educational technology services to nonprofit colleges and universities through its cloud-based SaaS platform. 2U provides technology for online learning, content development, class monitoring, marketing, etc.

Financials:

In the quarter ended March 31, 2022, 2U’s revenue was US$253.3 million, a 9% increase YoY, compared to US$232.5 million in Q1, 2021. The revenue includes US$10.9 million from edX, another online education provider, which 2U acquired in Q4, 2021. 

2U’s net loss was US$125.8 million or US$1.65 per share diluted in the March quarter of 2022, compared to a net loss of US$45.6 million or US$0.62 per share diluted a year ago. 

2U's cash and cash equivalents and restricted cash were US$233.6 million as of March 31, 2022.

The company expects fiscal 2022 revenue to be in the range of US$1.05 billion to US$1.09 billion and net loss to be between US$260 million and US$240 million.

The stock traded in the range of US$46.52 to US$7.28 in the last 52 weeks. 

Bottom line:

The 2U stock declined 55.57% YTD at the closing price of US$9.30 on June 28, 2022. 

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