Analysts ‘unimpressed’ as Learning Technologies agrees £802m takeover

AIM-listed Learning Technologies has finally agreed to a £802million takeover by a US private equity firm after a long-running pursuit.

The digital learning and talent management group’s board agreed a 100p per share offer from General Atlantic, reflecting a bumper 34 per cent premium to Learning Tech’s share price before bid interest initiated 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 ‘this is exactly the wrong time to sell the business’.

Learning Tech, which provides services to corporate and government clients, has seen its share price and revenues suffer since their 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’ over the next few years’.

It wrote earlier this year: ‘LTG is a business with high recurring revenues and operating margins approaching 20 per cent, and has been ranked as a ‘Strategic Leader’ in Digital Learning for eight consecutive years.

‘Management has a highly successful record of acquiring and improving operating assets.’

Under the terms of the deal, investors were also offered an alternative option of taking shares in the unlisted private equity firm – an option Learning Tech’s chairman Andrew Brode and chief executive Jonathan Satchell, who collectively own 24 per cent of the firm, have opted to take.

However, the option isn’t open to some shareholders, such as investment funds with a mandate that precludes them from holding unlisted companies.

Shore Capital said: ‘In our view, this encapsulates why this is a poor offer for the remaining shareholders whose mandates preclude them from holding unlisted equity.

‘Ultimately, the two largest shareholders have not been offered sufficient cash to be parted with their perceived future opportunity.’

General Atlantic, which also holds education tech firms like Duolingo and Unacademy, said Learning Tech would require further investment to adapt to a changing landscape and to compete.

Analysts at Peel Hunt said: ‘While we do not believe this is a knock-out price for the business, it may take an extended period for the shares to bounce back on a standalone basis.’