Arco welcomes to its portfolio of supplemental
solutions a high-quality asset inserted in favorable market trends
with exciting growth potential
Arco Platform Limited, or Arco (Nasdaq: ARCE), today
announced that it has received the final antitrust approval from
Brazil’s Administrative Council for Economic Defense (Conselho
Administrativo de Defesa Econômica – CADE), with no conditions, for
its previously announced acquisition of Escola de Inteligência
Cursos Educacionais (“EI” or “Escola da Inteligência”). Following
this final approval, Arco closed the acquisition today.
Escola da Inteligência is the largest social-emotional learning
(SEL) solution in Brazil, serving more than 330 thousand students
in 900 schools. EI was founded based on the Theory of Multifocal
Intelligence, created by the psychiatrist, researcher and writer
Augusto Cury. Mr. Cury has sold more than 30 million books in
Brazil and has published his works in more than 70 countries.
“In our industry, brand reputation, quality and distribution are
the winning factors, and they all take time to build. We are
thrilled to welcome to our portfolio the leading solution in
social-emotional learning, a company that has continuously pursued
those factors. Together, Escola da Inteligência and Arco will offer
high-quality cognitive and social-emotional educational solutions
to more than 1.6 million students,” said Ari de Sá Neto, CEO and
founder of Arco.
The deal unlocks large growth potential for Arco and Escola da
Inteligência. First, it allows Arco to serve the exciting SEL
vertical with the leading company in the sector. SEL offers
favorable demand trends, further intensified by the COVID-19
pandemic, which have led to >30% organic growth for EI over the
past years. Second, it significantly expands the cross-selling
potential of both companies, as they share a similar profile of
partner schools with a low overlap of existing clients. Finally,
the accelerated rollout of technology features in EI’s solution and
sales and marketing enhancements are expected to further drive
customer satisfaction and demand for an already established and
highly regarded solution.
About the Acquisition
The acquisition involves only the private sector business of
Escola da Inteligência. The payment terms are:
- 60% of EI's shares valued at R$288 million, with R$200 million
to be paid at closing and the remaining R$88 million in 2Q21. This
implies an EV of R$480 million, 12.5x 2019 EBITDA. This value is
subject to adjustments according to EI's 2021 ACV bookings.
- 40% of EI’s shares at 6.0x 2023 ACV (equivalent to 2.4x 2023
ACV), to be paid in 2Q23.
About Arco Platform Limited
Arco has empowered hundreds of thousands of students to rewrite
their futures through education. Our data-driven learning,
interactive proprietary content, and scalable curriculum allows
students to personalize their learning experience with high-quality
solutions while enabling schools to provide a broader approach to
education.
About Escola da Inteligência
Developed by Augusto Cury, EI provides an educational program
focused on the development of social-emotional skills within the
K-12 school environment. The main goals of the program are the
self-management of emotions, development of cognitive functions,
improvement of school performance and learning, and development of
skills to build healthy relationships and manage conflicts. It also
encourages entrepreneurial posture and creativity, increasing the
quality of life of teachers, parents and students.
Forward-Looking Statements
This press release contains forward-looking statements as
pertains to Arco Platform Limited (the “Company”) within the
meaning of the Private Securities Litigation Reform Act of 1995,
including, but not limited to, the Company’s expectations or
predictions of future financial or business performance conditions.
The achievement or success of the matters covered by statements
herein involves substantial known and unknown risks, uncertainties
and assumptions. If any such risks or uncertainties materialize or
if any of the assumptions prove incorrect, the Company’s results
could differ materially from the results expressed or implied by
the statements we make. You should not rely upon forward-looking
statements as predictions of future events. Forward looking
statements are made on the basis of the Company’s current
expectations and projections relating to its financial conditions,
result of operations, plans, objectives, future performance and
business, and these statements are not guarantees of future
performance.
Statements which herein address activities, events, conditions
or developments that the Company expects, believes or anticipates
will or may occur in the future are forward -looking statements.
You can generally identify forward-looking statements by the use of
forward-looking terminology such as “anticipate,” “believe,” “can,”
“continue,” “could,” “estimate,” “evaluate,” “expect,” “explore,”
“forecast,” “guidance,” “intend,” “likely,” “may,” “might,”
“outlook,” “plan,” “potential,” “predict,” “probable,” “project,”
“seek,” “should,” “view,” or “will,” or the negative thereof or
other variations thereon or comparable terminology. Moreover, all
statements in this press release, whether forward looking or of
historical fact, are based on the limited information available to
the Company during the due diligence process of EI and its business
operations (the “EI Business”) prior to the signing of the
acquisition agreement discussed herein. This limited access to
information may have impaired the Company’s ability to conduct a
full and comprehensive assessment of the EI Business, thus leading
to risks and uncertainties. Reasons for this uncertainty include,
but are not limited to, the following: (i) the analysis was
conducted on the basis of pro forma, unaudited and adjusted
financial statements of the EI Business; (ii) the accounting
parameters and criteria adopted by the EI Business are different
from the ones adopted by the Company; (iii) the transfer of the EI
Business to a new entity limits the Company’s ability to assess the
proper transfer of all assets and rights to such new entity. In
addition, the forward-looking statements regarding the EI Business
include risks and uncertainties related to statements about
competition for the combined business; risks relating to the
continued use of the EI brand in schools not run by the Company;
restrictions and/or limitations on the acquisition of the EI
Business that may be imposed by antitrust authorities or other
regulatory agencies; risks relating to the Company’s ability to
attract, upsell and retain customers of the EI Business; and
general market, political, economic, and business conditions in
Brazil or abroad.
Forward-looking statements represent the Company management’s
beliefs and assumptions only as of the date such statements are
made, and the Company undertakes no obligation to update any
forward-looking statements made in this presentation to reflect
events or circumstances after the date of this press release or to
reflect new information or the occurrence of unanticipated events,
except as required by law.
Further information on these and other factors that could affect
the Company’s financial results is included in filings the Company
makes with the Securities and Exchange Commission from time to
time, including the section titled “Risk Factors” in the Company’s
most recent Forms 20-F and 6-K. These documents are available on
the SEC Filings section of the Investor Relations section of the
Company’s website at: https://investor.arcoplatform.com/
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version on businesswire.com: https://www.businesswire.com/news/home/20201202006029/en/
Investor Relations Contact: Arco Platform Limited Carina
Carreira IR@arcoeducacao.com.br
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