LTG plans M&A spree to ward off bargain-hunting buyout firms

LONDON, March 22 (Reuters) – Learning Technologies Group (LTGL.L) is planning to buy a batch of technology-focused corporate training firms as part of a strategy to thwart unsolicited interest from private equity firms, CEO and co-founder Johnathan Satchell told Reuters.

The AIM-listed corporate education group, with a market value of 1 billion pounds, has been approached by bargain-hunting buyout funds in recent months, after market turbulence and gloomy economic conditions crushed technology shares, the CEO said.

But the company has not engaged in “any meaningful conversations” about going private and preferred to remain a public company, Satchell said.

LTG provides corporate training services, such as mobile apps and training videos, for airlines, government and other companies. Remote working and greater regulation have boosted demand for corporate learning.

Since hitting a peak of 1.85 billion pounds in market value in September 2021, LTG shares have slumped 46%, putting it in the sights of cash-rich private equity buyers.

The group, which operates in over 30 countries and employs about 5,000 people, is eyeing one or two U.S.-based acquisitions with a valuation of several hundred million pounds each this year, Satchell said, without identifying specific targets.

It has about 225 million pounds in cash and debt available for M&A over the next three years, he said. Its net debt/EBITDA ratio of 1x could be extended to up 1.5x for deals, he added.

The company could turn to investors for funds, provided any capital raising is not “too dilutive” to its share price, the CEO said.

He added he would prefer to finance any big-ticket deals via the equity markets, but mindful of tough market conditions, he would consider alternative financing options.

Chairman and co-founder Andrew Brode is LTG’s largest shareholder with a 14.8% stake. Brode directed requests for comment to LTG when contacted by Reuters.

LTG was listed in 2013 and has sold stock six times, buying more than 15 companies.

Company valuations in the private market have started to fall from pandemic highs in the last year, with software businesses now available at more “sensible prices”, Satchell added.

LTG is one of thousands of companies that banked with failed U.S lender Silicon Valley Bank. Around 10% of LTG’s 110.7 million pounds total cash and cash equivalents at March 10 were on deposit with Silicon Valley Bank and its UK subsidiary.

It said the collapse would not have a “material effect on its financial position.”

Satchell expected the fallout to create “nervousness” among learning technology firms already burning through cash, adding it could accelerate consolidation in the industry.

Reporting by Amy-Jo Crowley, editing by Sinead Cruise and Bernadette Baum

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