2U, a Lanham, Md-based, publicly traded online program manager, is undergoing a strategic review in light of pressure from activist investor Sachem Head—the same one that pushed another education technology company to explore a sale last year.
Citing “people familiar with the matter,” Bloomberg reports that 2U has hired advisers to figure out how to improve its business performance, which could result in a sale or keep 2U independent. The news comes after New York hedge fund Sachem Head bought enough stock to become a top 2U shareholder, the outlet reported in November.
Rishi Jaluria, a senior research analyst at D.A. Davidson, said in an email that private equity is the most likely buyer because 2U has "a long path to turning around the business." Private equity firm Vista is a contender because it has edtech companies in its portfolio. Vista owns PowerSchool, a K-12 student information system provider, and EAB, a provider of enrollment management, student success and operations strategy services to K-12 schools and colleges.
Golden Gate Capital is another because 2U's recently added CFO, Paul Lalljie, was CFO at a company previously taken private by Golden Gate.
2U worried stockholders in the summer of 2019 when it announced double the expected net loss for the fiscal year and that it expects to launch fewer online graduate programs in 2020. 2U’s stock traded at $22.66 when the market opened Tuesday, compared to a historic high of $98.08 in May 2018.
The company’s potential sale comes as Instructure, a Salt Lake City-based provider of learning management system Canvas, which dominates the college market, nears a shareholder vote to approve or decline its sale to private equity firm Thoma Bravo.
Instructure announced in November that it was exploring a sale, a month after Reuters reported that Sachem Head had bought stock in the company. The Instructure vote is scheduled for Feb. 13 and has met some resistance. Several shareholders have publicly decried the deal and two stockholder class action lawsuits have been filed.
