Shares of education technology provider 2U are surging on Tuesday on news it will acquire open online course provider edX’s brand and nearly all its assets. The move is the latest indication that digital learning will remain a key consideration in education after the pandemic.
2U (TWOU) is up 6.2%, to $42.89 in recent trading following the announcement it will buy edX, a nonprofit founded by Harvard University and the Massachusetts Institute of Technology in 2012.
The $800 million cash deal will allow the company to offer more than 3,500 programs to some 50 million customers globally. It sees the transaction closing in roughly four months.
That said, 2U did warn that the acquisition could lower its earnings before interest, taxes, depreciation, and amortization (EBIDTA) by a low single-digit percentage on an adjusted basis in 2022. It expects the edX assets will add to earnings in the following year.
With the Covid-19 pandemic pushing many schools to switch to online schooling, education technology firms like 2U benefited. Still, 2U said that edX will continue to a public-benefit entity within the company, allowing ongoing free class auditing and credentials for those seeking lower-cost degrees.
The widespread rollout of vaccines means that most students in the U.S. will return to a relatively normal school year this fall; however that’s not the case in many other nations around the world. In addition, rising higher education costs makes offerings like edX attractive to students seeking alternative, lower cost degrees and certification.
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