Benzinga | Aug 28, 2020 05:01PM EDT

Arco To Acquire Escola da Inteligncia; Says '60% of EI's shares valued at R$288 million, with R$200 million to be paid at closing and the remaining R$88 million in 2Q21.', Implying EV Of R$480M

Arco to add to its supplemental portfolio the largest social-emotional learning solution in Brazil, a unique asset inserted in favorable market trends with exciting growth potential

S?O PAULO, Brazil, Aug. 28, 2020 (GLOBE NEWSWIRE) -- Arco Platform Limited, or Arco (NASDAQ:ARCE), today announced that it has entered into a definitive agreement to acquire Escola de Intelig?ncia Cursos Educacionais ("EI" or "Escola da Intelig?ncia"), the leading solution in social-emotional learning (SEL) in Brazil.

"It is an honor for Arco to have EI joining us in our mission to transform the way students learn by delivering high quality education at scale. EI has built a strong reputation over its 10 year-long track record and has trusted Arco to continue growing its business and delivering a highly regarded solution to K-12 students. We are very happy to welcome the team and its 330,000 students and 900 schools into our family," said Ari de S? Neto, CEO and founder of Arco.

Escola da Intelig?ncia was founded based on the Theory of Multifocal Intelligence, created by the psychiatrist, researcher and writer Augusto Cury. Mr. Cury has sold more than 30 million books in Brazil and has published his works in more than 70 countries.

"EI's team is proud to be joining Arco, a company that we admire and that has the same focus on quality that we do. This deal will combine the leading company in cognitive solutions with the leader in social-emotional learning. Together we will continue writing a successful story for EI, as this deal unlocks cross-sell opportunities and accelerates our technology offering," said Camila Cury, CEO of EI.

This transaction broadens Arco's supplemental market presence by adding a strong brand to its portfolio. Arco believes there is a favorable market trend for SEL, further increased by the COVID-19 pandemic, and that EI is well positioned to capture this demand outside and within Arco's school base.

Details regarding the EI acquisition

The acquisition involves only the private sector business of Escola da Intelig?ncia.

The payment terms are:

2 60% of EI's shares valued at R$288 million, with R$200 million to be paid at closing and the remaining R$88 million in 2Q21. This implies an EV of R$480 million, 12.5x 2019 EBITDA. This value is subject to adjustments according to EI's 2021 ACV bookings.

4 40% of EI's shares at 6.0x 2023 ACV, to be paid in 2Q23.