After establishing new leadership in the first half of FY24, HR Software-as-a-Service (SaaS) company Schrole Group (ASX: SCL) has almost closed an acquisition proposal from EdTech company TES Global.  

The Company has entered into a Scheme Implementation Deed with TES Aus Global, a subsidiary of TES Global Limited (TES). TES will acquire 100% of Schrole’s issued capital by way of a Court-approved scheme of arrangement for a cash price of 48.52 cents per Schrole share. The Scheme values Schrole’s equity at $18.15 million.

Managing Director and CEO of Schrole, Rob Graham, said, “The Board of Schrole believes this transaction represents a compelling opportunity for Schrole shareholders to realise immediate and certain value. 

“We believe our deep expertise and focus on delivering outstanding outcomes for our clients will be enhanced by the breadth of resources and strong market reputation that TES brings. Working with TES will provide excellent outcomes for our clients and our team, and we look forward to partnering with the organisation going forward.”

TES is an educational technology platform supported by teachers who create online products and services. TES provides various digital solutions to over 19,000 domestic UK, Australian and International schools globally. It is wholly owned by Onex Partners, a Canadian private equity firm that is a subsidiary of Canadian investment manager Onex Corporation.

Schrole provides global Human Resources Software-as-a-Service (SaaS) targeting teachers and educational organisations. Schrole is scaling globally and targeting new growth markets, with TES Global being an adequate fit. In Q3 FY24, ending March 2024, Schrole’s ARR reached $4.2m, up from $3.9m at the end of December 2023. Its cash receipts of $1.60 million were up 24% compared to Q3 FY23.

The Company’s customer contract renewal rates also improved, reaching 73% (66% in PCP) and its Net Revenue Retention reached 90% (52% PCP). 

While its financials are looking up, in June 2024, the Company suffered a data breach with a third party obtaining unauthorised access to personal information of certain candidates who had registered on the Schrole platform. An investigation is ongoing, but there is no indication of whether this will impact its retention rates. 

In parallel to signing the deed with TES Aus, Schrole and TES have also entered into an Alliance Agreement, under which both parties will use “reasonable endeavours” to collaborate on commercial opportunities. 

The cash consideration of 48.52 cents per Schrole share represents a 203% premium to the Schrole closing price of 16 cents on June 14, 2024. The Scheme provides certainty of value to Schrole shareholders and the opportunity to sell 100% of their shareholdings for cash.

Schrole shareholders are expected to meet in September to vote on the Scheme. Schrole’s Board has unanimously recommended that shareholders vote in favour of the Scheme in the absence of a Superior Proposal and subject to an Independent Expert concluding that the Scheme is in the best interests of the Company’s shareholders.