Learning Technologies Group (LTG), a prominent player in the education technology sector, is set to transition from the London Stock Exchange as it has reached an agreement for a takeover by General Atlantic, an American private equity firm. The deal, which values LTG at £836 million, comes with an offer price of 100p per share, reflecting a 34% premium on the company's share price at the end of September. However, this valuation is significantly lower than its peak market value of £1.8 billion in 2021.

In explaining the decision, General Atlantic expressed that, “In the context of continued market and macro uncertainty, General Atlantic believes that the next stages of LTG’s journey and the execution of its strategy can be best delivered as a private company.” The company cited the burdens associated with being publicly traded, including frequent financial reporting and regulatory demands, as factors influencing their strategy.

LTG's recent challenges have been exacerbated by the rapid integration of artificial intelligence within the education sector. The company stated, “While AI provides the opportunity for substantial efficiencies in the provision of content and services, it may also mean that some services and activities provided by LTG will be challenged, adding to the current pressure on demand and pricing for custom content work.” This shift has prompted LTG to indicate a dire need for increased investment in order to leverage AI advancements effectively. The company acknowledged that without such investments, the outlook for its business model could become increasingly nebulous.

In a financially turbulent environment, LTG’s performance has suffered; the firm reported a revenue decline of 12% to £250 million during the first half of the year. Compounding this issue, LTG has lowered its full-year revenue guidance from a previously anticipated range of £480-500 million down to £473-493 million, partially due to adverse exchange rate fluctuations.

The news of the takeover has led to a rise in the company’s shares, which have surged by 37% relative to the same period last year. LTG’s decision to accept the offer aligns with a growing trend of tech firms exiting the London Stock Exchange, a phenomenon also reflected in recent acquisitions such as Darktrace’s £4.3 billion purchase in April and the sale of fintech company Gresham Technologies for £147 million by STG.

Charles Hall, head of research at Peel Hunt, commented on the broader implications of these transactions, stating, “The scale of activity and level of premium show how many good quality companies there are in the UK as well as how undervalued they are.” He highlighted the pressing need for fundamental reforms to enhance investor demand within the UK market, cautioning that without such reforms, more companies could consider leaving the London market as early as 2025.

Source: Noah Wire Services