Led by Goldman Sachs Asset Management, the acquisition values Kahoot at $1.7 billion (17.2 billion Norwegian kroner), with a purchase price of 35 NOK per share.
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Major shareholders in the deal include General Atlantic, LEGO Group’s KIRKBI Invest A/S, and Glitrafjord, controlled by Kahoot CEO Eilert Hanoa. Other unnamed investors and management will also hold stakes in the company.
The deal represents a premium of 53.1% on Kahoot’s publicly traded shares, based on the closing price on the Oslo Stock Exchange on May 22, 2023, which was NOK 22.86.
While this acquisition marks a significant milestone for Kahoot, it signifies a decrease in valuation from the company’s peak during the Covid-19 pandemic.
This trend reflects the challenges faced by tech companies in the current economic climate, as they grapple with financing despite their growth.
Kahoot emerged as one of the remote learning startups that experienced tremendous growth as individuals and institutions turned to online education during the pandemic.
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The company, which serves K-12 students as well as adults and businesses, amassed billions of participants in more than 200 countries and regions. Currently, it boasts over 1 million paying users.
However, like many other tech businesses, Kahoot has faced difficulties in the public markets, as consumers and businesses reduced their reliance on digital services, including e-learning and e-commerce. In its recently released financials, Kahoot reported mixed results reflecting these market dynamics.
For Q2, the company recorded $41 million in revenues, representing a modest 14% increase compared to the previous year.
Invoiced revenue stood at $40 million, indicating an 8% increase. Kahoot reported EBITDA of $11 million, a substantial 60% growth, and operating cash flow of $10 million, representing a noteworthy 90% increase.
However, Kahoot also highlighted its cash equivalents, which amounted to only $96 million by the end of the second quarter.
This figure underscores the fluctuating nature of Kahoot’s share price, which reached its peak at 109 NOK/share in 2021. Over the years, the share price has experienced considerable variability, trading at 17.92 NOK/share a year ago in June 2022.
With this acquisition, Kahoot aims to reduce the volatility associated with its public listing and solidify its long-term prospects.The company has pursued a two-tier approach to financing, leveraging both private and public avenues.
It has attracted investments from prominent venture capital firms such as Northzone and Creandum, as well as strategic partners like Microsoft and Disney. Notably, General Atlantic acquired SoftBank’s 15% stake at a loss, as part of SoftBank’s portfolio simplification efforts.
Despite the lower valuation, the private equity group leading the acquisition believes in Kahoot’s long-term potential and is committed to leveraging their existing stakes to drive growth and innovation.
Michael Bruun, Global Co-Head of Private Equity at Goldman Sachs Asset Management, expressed confidence in Kahoot’s mission and value proposition, emphasizing the partnership’s potential to expand a critical learning and engagement platform.
General Atlantic also expressed its commitment to Kahoot’s growth, highlighting the company’s momentum in scaling its enterprise offering, expanding its subscriber base, and fostering partnerships in intellectual property.
The involvement of KIRKBI, the investment arm of LEGO Group, underscores the strategic support Kahoot continues to receive.
The leadership team at Kahoot, including CEO Eilert Hanoa, will remain with the company following the acquisition.
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Hanoa expressed enthusiasm about the partnership and the opportunity to advance education for millions of learners worldwide.
Kahoot’s mission to make learning enjoyable aligns with the values of the investors, stakeholders, and the talented team within the Kahoot Group.