Tarena International, Inc. (TEDU) Stock Prices Trending Up After Announcement of Merger with Kidedu Holdings Ltd.

Tarena International, Inc. (TEDU) stock prices are up 11.2819% shortly after the trading day commenced on April 30th 2021, bringing the price per share up to USD$3.7502.

Merger Agreement with Kidedu

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The frontrunner in the provision of professional and K-12 education services in China announced its entering into an Agreement and Plan of Merger with Kidedu Holdings Ltd. and Kidarena Merger Sub on April 30th 2021. As per the agreement, TEDU will see the acquisition of Merger Sub, with TEDU being the surviving company. Following this merge, TEDU will become a wholly owned subsidiary of Kidedu Holdings. The equity value of the exchange is value at almost USD$230.6 million.

ADS Cancellation

Following the merge, each American Depositary Share (ADS) of TEDU will be cancelled in return for the right to a payout of USD$4.00 per ADS without interest. Each ADS represents a single Class A ordinary share, and each share will be valid for an exchange granted it is outstanding immediately prior to the effective time of the merger.

Promising Revenue Reports

For the fourth quarter of 2020, TEDU reported net revenues of USD$99.7 million representing a 27.6% year-over-year increase. 54.2% of the total net revenues came from the adult education business, which reported generating USD$54 million, a 7.2% year-over-year increase. The remaining 45.8% of total net revenues was comprised of net revenue from the K-12 education business.

Uptrend in Gross Profits

Gross profits were up to USD$55 million, a staggering 79.9% increase from the same period of the previous year. Q4 2020 profits reflect a 55.2% gross profit margin, up from the 39.1% reported in the fourth quarter of 2019.

TEDU Liquidity Position

Q4 2020 saw operating losses decrease by a significant 74.3% from the same time period in 2019, down to USD$13 million. Net losses were also down, from USD$46.97 million in Q4 2019 to USD$14.5 million in Q4 2020. Overall, the company reported USD$ 55.9 million in cash, cash equivalents, both current and non-current time deposits, and restricted cash as of December 31st 2020.

Shift in Enrollment Demographics

Total student enrollments in adult education business were reported at 35,100, a 21.3% decrease from the fourth quarter of 2019. This went hand in hand with the decreasing of the total number of adult education learning centers from 130 as of December 31st 2019 to 104 as of December 31st 2020. Conversely, total enrollments in the K-12 education business were up by 47%, from 87,300 in Q4 2019 to 128,300 in Q4 2020. Accordingly, the total number of K-12 education learning centers increased from 217 as of December 31st 2019 to 236 as of December 31st 2020.

Future Outlook for TEDU

TEDU stock prices have seen positive activity since the announcement, with current and potential investors confident in the company’s decision to go private as a result of their merger agreement. Hopes are high for the TEDU to be able to leverage its newfound resources to usher in a period of sustained and significant increases in shareholder value.


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