Goldman Sachs agrees to privatize Kahoot, a digital education company

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Goldman Sachs’ asset management division and General Atlantic are on the verge of acquiring a Norwegian educational technology group through an all-cash private-equity deal valued at nearly $2 billion. This move comes after the company experienced fluctuations in the stock market.

In a statement on Friday, Kahoot’s board of directors recommended accepting the offer of NKr35 per share, which values the company at NKr17.2bn ($1.7bn). Following the announcement, the company’s shares rose approximately 12% to NKr34.8.

Kahoot, based in Oslo, gained significant momentum during the Covid-19 pandemic as schools and universities transitioned to online learning. However, since September 2021, the enthusiasm has diminished, leading to a 50% decrease in its share price.

Goldman Sachs Asset Management aims to invest in the company’s expansion and capitalize on the growing market for digital learning tools, particularly in compliance training.

General Atlantic acquired a 15% stake in Kahoot in September, buying the holding from SB Northstar, a now-defunct hedge fund owned by Japanese conglomerate SoftBank. SB Northstar incurred substantial losses from the investment, which ultimately led to its closure. The fund’s misfortunes with Kahoot, Swedish software group Sinch, and THG were catastrophic, accumulating losses amounting to nearly $6bn. Nordea Bank estimates that SoftBank suffered a loss exceeding 70%, considering its average investment price of Nkr63 per share in Kahoot.

Kirkbi, an investment vehicle managed by the founding family of Lego, along with Kahoot’s management team, including CEO Eilert Hanoa, are also participating in the investment.

About a third of Kahoot’s shares have already committed to the offer, and Hanoa is expected to continue leading the group.

In March 2021, the company initiated a “re-IPO” to transition from Oslo’s junior market to a main market listing. However, Kahoot’s shares have struggled since then.

The acquisition offer for Kahoot represents a 53% premium compared to the closing price on the Oslo Stock Exchange on May 22, prior to significant disclosures regarding co-investors’ stock positions.

In the second quarter, adjusted earnings before interest, taxes, depreciation, and amortization increased by 60% to approximately $11 million compared to the previous year.

This year, private equity investors have shown interest in acquiring listed companies due to declining valuations in public markets and a general scarcity of dealmaking, including among buyout firms.