Skillsoft Corp. SKIL -0.10% has agreed to acquire rival U.S.-based educational technology company Codecademy for $525 million in cash and stock, the companies said Wednesday, the latest bet on consolidation in the online learning market.
Closely held Codecademy offers free, basic online computer coding classes in areas such as programming, data science and cybersecurity. The New York-based startup’s services also include more in-depth paid offerings. In February, Codecademy raised $40 million in new funding, seeking to expand into markets such as India where a high percentage of people are pursuing engineering degrees.
Based in Boston, Skillsoft offers customers a software that provides training and classes in leadership development, workplace harassment prevention and coursework to qualify as system engineer. Its library of 180,000 courses, books and videos is offered in 29 languages and customers include the U.S. Air Force, Siemens AG and United Parcel Service Inc.
Spurred by the pandemic, employers are increasingly turning to digital training courses as a way to retain and retrain workers in the office or at home, a trend that is expected to continue beyond the virus.
For Skillsoft, the deal bolsters its technical skills offerings by adding expertise in programming languages aimed at developers and other types of technology workers.
“If you look at the skills gap, it’s most acute in technology,” said Jeffrey Tarr, Skillsoft’s chief executive.
Codecademy Chief Executive Zach Sims said the sale will give it access to a bigger customer base. The deal “really helps grow Codecademy across businesses much faster than we could independently,” he said.
Skillsoft’s past struggles demonstrate the risks in the fast growing online education market. The company filed for bankruptcy protection in June 2020, hurt by a combination of too much debt and stiff competition from companies that provided free access to similar services.
It emerged from bankruptcy protection in August of that year, eliminating $1.5 billion in debt. It went public in June 2021 in New York through a merger with special-purpose acquisition company Churchill Capital Corp II.
Skillsoft became over-levered by its previous private-equity owners and those issues were addressed by recapitalizing the company and bringing in a new management team and board, said Skillsoft’s Mr. Tarr. He joined the company as part of Skillsoft’s merger with Churchill.
Skillsoft’s acquisition of Codecademy is its third and largest acquisition since the SPAC listing.
The deal brings together two portfolio investments of Amsterdam-based Prosus NV, the largest shareholder in Chinese internet and videogaming giant Tencent Holdings Ltd.
Prosus is one of the world’s biggest technology investors, making bets across the globe on a range of online platforms in food delivery, classifieds, fintech and educational technology. It made its biggest acquisition yet in August, acquiring Indian payments platform BillDesk for $4.7 billion.
Prosus is Skillsoft’s biggest shareholder, owning a 38% stake, according to FactSet. Naspers Ltd , which controls Prosus, holds about a 12% stake in Udemy Inc., a Nasdaq-listed, online-learning operator that supplies content to Skillsoft’s platform. Codecademy also counts Prosus as an investor.
Prosus owns a stake in India ed-tech operator Byju, which has been valued at $16.5 billion. In June Prosus reached a $1.8 billion deal to acquire Stack Overflow, an online community for software developers.
Write to Ben Dummett at [email protected]
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