Learning Technologies Group (LTG) is set to leave the London Stock Exchange following acquisition by US private equity firm General Atlantic.
- The deal values LTG at £836m, representing a 34% premium on its September share price but only half of its 2021 peak market value.
- LTG aims to navigate AI challenges with increased investment, highlighting potential uncertainties in its business model.
- LTG’s shifting financial outlook underlines the need for strategic changes amid macroeconomic pressures.
- The acquisition reflects broader market trends, with more UK firms being acquired by overseas entities.
Learning Technologies Group (LTG), a prominent player in the digital learning market, is poised to exit the London Stock Exchange after sealing an acquisition deal with US-based private equity firm General Atlantic. This transaction, agreed at 100 pence per share, extends a 34% premium over LTG’s share price as of September, effectively valuing the learning tech company at £836 million. Despite this, the valuation remains significantly lower than its £1.8 billion peak market cap achieved in 2021.
General Atlantic emphasised that taking LTG private will alleviate the pressures tied to public company status, such as frequent financial disclosures and the associated regulatory demands. The firm stated, ‘In the context of continued market and macro uncertainty, General Atlantic believes that LTG’s strategy is best delivered without the external pressures of being publicly owned.’
LTG, on its part, acknowledged the growing influence of artificial intelligence in the education sector, which poses substantial challenges and opportunities. The company noted that while AI could enhance efficiencies in content delivery, it may also disrupt some of LTG’s existing services, influencing demand and pricing dynamics unfavourably. The financial requirements to seize AI-driven opportunities are significant, and LTG’s future would be uncertain without such investments.
The firm’s September financial report had already indicated stress points, citing high inflation and the rise of AI adoption as factors leading to a 12% fall in revenue, down to £250 million in the first half of the year. Consequently, full-year revenue expectations were adjusted to a lower range, between £473 million and £493 million, due to currency fluctuations, with projections closing in at the lower end.
Following the acquisition news, LTG shares saw a 37% increase compared to the previous year. This move is part of a growing trend where UK technology firms are acquired by foreign private entities, a trend highlighted by General Atlantic’s previous acquisitions, including the high-profile purchase of Darktrace.
‘The scale of acquisition activity and the levels of premium reveal the quality of UK companies and their perceived undervaluation,’ remarked Charles Hall, head of research at Peel Hunt. He expressed concerns about the need for market reforms to retain companies within the UK, hinting that without changes, more companies might follow suit by 2025.
The acquisition of LTG by General Atlantic underscores a strategic pivot necessitated by evolving market dynamics and technological advancements in AI.
