China’s NetDragon makes bid for Promethean World to widen its compass in online education

PUBLISHED : Wednesday, 17 June, 2015, 5:35pm
UPDATED : Thursday, 18 June, 2015, 9:10am

NetDragon Websoft, a major online games developer and operator in China, has made a US$130 million offer to buy London-listed Promethean World, a global provider of interactive learning technologies.

The proposed acquisition was confirmed by NetDragon chairman Liu Dejian in a regulatory filing on Wednesday, following Promethean's announcement that it was in preliminary negotiations with the Chinese company.

Shares of Hong Kong-traded NetDragon, which is based in Fujian province, rose as much as HK$35.90 (US$4.63) after the noon break on the back of the news. The stock closed up 1.93 per cent to HK$34.25.

According to Promethean, the indicative terms proposed by NetDragon are for a cash offer of 40 pence (US$0.63) per share.

Liu said in the company's filing that the proposed takeover of Promethean, which has headquarters in both Britain and the United States, was in "the early stage of due diligence and discussions".

Since last year, NetDragon has been accelerating the development of its online and mobile education business, which includes social networks, cloud platforms, media tablets, and interactive classroom software for children in primary and secondary schools. 

In addition, it is developing vocational, non-academic credentials and other educational products, such as those that use an interactive gaming model to make learning fun and more engaging. 

It is also focused on licensing and purchasing a wide variety of content from domestic and foreign publishers of course textbooks and other educational products.

Earlier this month, the company signed a stock purchase agreement for an undisclosed amount to acquire ChiVox, which is based not far from Shanghai in Suzhou, in east China’s Jiangsu province.

ChiVox develops so-called intelligent voice and language technologies, and provides services for voice assessment and oral exams to leading education service providers in mainland China.

NetDragon also raised US$52.5 million in January from new investors, including IDG Capital Partners, Vertex Venture and Shenzhen-listed animation producer Alpha Animation, for its online education subsidiary.

"We believe the education industry is ripe for a major change. There is a strong and ever-growing need for a mobile education platform that creates true value and makes people want to come back to learn more," Liu said at the time.

Internet consultancy firm iResearch expects mainland China's online education market to post total revenue of 119.2 billion yuan (US$19.4 billion) this year, up from an estimated 99.8 billion yuan in 2014. 

It predicted that a combination of on-demand and live-transmission courses will become dominant in online education in the future.

Established in 1999, NetDragon played a pioneering role in the overseas expansion of Chinese online games companies. It has been operating various game titles in more than 10 languages since 2003. 

Liu, the company's founder, was recently in the news for building the world's only licensed Starship Enterprise replica structure in Fuzhou, Fujian province. 

Liu is a self-confessed huge fan of Star Trek, the popular science-fiction television and movie franchise.