Scientific Learning to Acquire Chinese Blended Learning Company BrainMaps.
19 January 2018 - US-based Scientific Learning Corp. (OTC: SCIL) has signed a definitive agreement with Brain Maps Technology Co. Ltd. to acquire China-based blended learning provider BrainMaps, the company said.
BrainMaps has more than 70 English language learning centres across China.
Scientific Learning said that BrainMaps combines its patented language learning technologies and a unique Online-to-Offline methodology to help students achieve fluency in English in as little as three years.
The anticipated acquisition represents a major strategic shift for Scientific Learning to the large and rapidly expanding English language learning market in China as the primary growth engine for the company's unique and established intellectual property.
Scientific Learning's neuroscience-based educational technologies are built on more than 40 years of research and have been research-validated by over 250 studies, including those from Stanford, MIT, and Harvard.
The proposed acquisition is contingent upon financing transactions to obtain the capital necessary to acquire BrainMaps and expand its presence in China, and board of director and shareholder approval of the election of Rick Lee and Tiffany Koo (or alternatives chosen by them) to the Scientific Learning board effective upon closing of the acquisition, among other conditions.
Scientific Learning has engaged Tyton Partners, the provider of investment banking and strategy consulting services to the global knowledge sector, as its exclusive investment banking advisor to assist with the transaction.
Under the terms of the agreement, BrainMaps' shareholders will receive 40% of the common stock of Scientific Learning, on a diluted basis, subject to certain exclusions (USD 5.4m).
In addition, Scientific Learning will pay BrainMaps shareholders USD 6.2m in cash.
Also, BrainMaps' shareholders will be eligible for up to USD 12m in earn-out cash payments earned over seven and a half years.
Earn-out payments will be made annually based on the continued employment of Rick Lee and Tiffany Koo, with USD 9m of the potential earn-out to be earned as a percentage of the free cash flow generated by BrainMaps' business.
The agreement also sets forth material terms of employment agreements to be executed at closing between the company and Rick Lee and Tiffany Koo.
Terms of the deal are subject to various conditions, exceptions and limitations.
Based in Oakland, Calif., Scientific Learning is an SaaS provider that delivers neuroscience-based educational technologies.
Scientific Learning's programs, Fast ForWord and Reading Assistant, have been used by more than 2.8m learners in more than 2,600 K-12 schools in the United States, by over 500 private practice clinicians, by thousands of students via a direct-to-consumer channel, and in over 55 countries via Value Added Resellers.
The Fast ForWord programmes cross-train foundational language and cognitive skills necessary for rapid English language development, while Reading Assistant uses speech verification technology to provide real-time corrective feedback to students as they read and speak, in a manner similar to that of an individualized language and reading coach.
BrainMaps, a VAR partner of Scientific Learning's for over 12 years, was founded by Rick Lee and Tiffany Koo, who are using their past experience as national directors for companies such as Wall Street English and Gymboree to rapidly expand the BrainMaps model across China.
Based on its compelling student outcomes and rapid growth, BrainMaps was named a top 10 franchise in China by Entrepreneur magazine in 2016.
Sector: Business and Consumer Services
Buyer: Scientific Learning Corp
Deal size in USD: 11.6m
Type: Corporate Acquisition
Financing: Cash and Stock
Buyer advisor: , ,
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|Publication:||M & A Navigator|
|Date:||Jan 19, 2018|
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