Skillsoft to buy NETg for $285m

SkillSoft PLC, a Nasdaq-quoted provider of content resources and complementary technologies for integrated enterprise learning, has signed a definitive agreement to acquire NETg from The Thomson Corporation. Under the terms of the agreement, approved by the board of directors of SkillSoft and also by The Thomson Corporation, SkillSoft will pay approximately $285m to acquire NETg.

The companies say the acquisition will add to SkillSoft's existing offerings in e-learning content, Referenceware and learning platform technology, through the addition of NETg's offerings in live virtual instructor-led training (ILT), blended learning, content authoring/LCMS technology, learning content and custom development services. The acquisition supports the company's overall strategy to continually increase the quality and flexibility of learning solutions available to corporate, government, education, and small-to-medium size business customers from SkillSoft.

NETg capabilities will strengthen SkillSoft's ability to compete for a greater share of the $13.2bn corporate training market that includes many larger players with more comprehensive product offerings.

"As our enterprise customer organisations are increasingly connecting their learning strategies to their overall business objectives, we find those organisations looking for a greater range of products and services. Our enterprise customers have many choices of suppliers to meet their ever- expanding needs, and we continuously look for ways to expand our capabilities to sustain and increase our competitiveness," said Chuck Moran, CEO of SkillSoft. "The combination of SkillSoft and NETg will immediately bring a wider range of solutions to the customers of both SkillSoft and NETg. By combining the two organisations we will be able to optimise our development focus and deliver a wider range of elearning solutions to customers than either organisation has delivered in the past."

Under the terms of the acquisition agreement, SkillSoft expects to issue approximately 11.1 million SkillSoft American Depositary Shares (ADSs) and $216m in cash to Thomson, subject to certain adjustments at closing. The cash portion of the consideration will be financed through available cash balances and committed bank financing from Credit Suisse of approximately $180m.

Based on unaudited financial statements, consolidated revenue for the NETg business was approximately $160m in 2005 with gross margins of approximately 72%. As well as its core e-learning content, which in 2005 was around 74% of revenue, NETg also offers other products and services, including instructor-led training and custom consulting services. Following the closing, SkillSoft will determine which selected business lines and channels of distribution are consistent with its long-term growth and profitability objectives.

The acquisition is estimated to close in the first half of calendar 2007 (fiscal 2008).

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