We read a lot about US companies buying British firms — less so when it’s the other way round. But that’s exactly what the Aim-listed e-learning and software outfit Learning Technologies Group (LTG) did with last month’s acquisition of Maryland-based GP Strategies.
GP has four times as many staff as LTG and generates twice the revenue at about $500 million (£370 million). The training specialist has a strong global presence and useful relationships with HSBC, General Motors, Boeing and Microsoft. LTG’s chief executive, Jonathan Satchell, thinks buying GP will be a catalyst for international expansion.
He has certainly been busy, completing five acquisitions in 2020 and three more in the early months of this year.
London-based LTG now has a spectrum of software and services businesses used by global companies to hire, train and manage staff.
The portfolio includes Gomo, recently hired by Rentokil Initial to provide mobile-friendly induction courses and other training for 30,000 staff in 22 languages.
Meanwhile, PeopleFluent helps identify potential new recruits and research appropriate pay levels, and the Bafta-winning games studio Preloaded has created virtual reality and other education tools for Google, the BBC and Lego. LTG also includes Affirmity, which helps more than 1,100 larger companies and other clients deliver diversity and inclusion programmes.
While many firms would, in the past, have managed such training and services in-house and face-to-face, we suspect that LTG can do very well from the shift to online, app-based training alternatives — a trend that will almost certainly bed down as hybrid working continues for millions of workers.
Over the past five years, LTG’s share price has risen by more than 450 per cent. Its revenues grew by 29 per cent to £82.6 million in the first half of this year, rallying well after a leaner time at the height of the pandemic.
Not everyone in the City liked the look of the GP Strategies acquisition, which may partly explain why the shares have ticked down over the past two months to 178p. The deal was funded by borrowing $265 million and an $85 million placing.
But LTG has a decent record of de-leveraging swiftly after deals and quickly making loss-making acquisitions profitable. And in Andrew Brode — perhaps better known for his tenure at the translation and business services group RWS — LTG has a wise and experienced chairman at the helm.
The lower share price looks like a good opportunity to get involved. Buy.
