EdtechX Holdings (NASDAQ

EDTX) Announces Merger Agreement With Meten Education (China) - Seite 2

Meten has grown rapidly and profitably to reach $200 million (RMB 1,424m) in revenue and $20.1 million (RMB 144m) in EBITDA in 2018, up from $113.9 million (RMB 802m) in revenue and $2.4 million (RMB 17.1m) ¹  in EBITDA in 2016, representing a 2-year revenue CAGR of 33% and 2-year EBITDA CAGR of 190%.

The merger consideration in the transaction implies $535 million in equity value for Meten. In connection with the transaction, EdtechX may provide Meten with up to $100 million of capital, including through the drawdown of up to $20 million from an irrevocable commitment provided by Azimut pursuant to a forward purchase contract originally entered into in connection with EdtechX’s initial public offering². These proceeds are expected to mostly fund future expansion as well as potential synergistic and accretive acquisitions³.

According to research published by Citibank, the ELT market in China is  expected to grow to $43 billion in 2022, representing a 21% CAGR, mainly driven by growing expenditure on education, urbanisation, increasing awareness of the importance of English, and technology development.   

According to research published by Morgan Stanley, the fast paced urbanisation of China drives demand for education, vocational training and edtech services. By 2030, online tutoring could be utilised by over 30% of Chinese in education, rising from 10% now, and so represents a $150 billion market.

EdtechX Co-Founders, Benjamin Vedrenne-Cloquet (CEO) and Charles McIntyre (Chairman and CIO) declared in a joint statement:

“The growing urban Chinese middle class’ aspirations for their own careers and their children’s academic success is unleashing large consumer spend and investment opportunities for the education and lifelong learning markets in China. Education in China has become the ultimate consumer good ! Demand for tutoring, English language training, job-oriented upskilling, is growing at double digit rate.  Meten EdtechX will operate at the heart of this with a market leading position in the ELT segment and a profitable omnichannel business model combining strategic retail presence, technology and digital delivery”.

Meten Co-Founders, Jishuang Zhao, Siguang Peng, Yupeng Guo, declared in a joint statement:

“With the support of EdtechX and its international investor group, we become uniquely positioned to strengthen our market leading position and to make the most of the consolidation and digital growth opportunities available in our industry. Our approach will continue to be focused on profitable growth and to provide industry-leading English language education and training services to Chinese students and professionals. We are looking forward to this new phase of growth as a public company and as Meten EdtechX.”