2U, Inc. and edX to Join Together in Industry-Redefining Combination
2U to acquire substantially all edX assets, including edX brand, website, and marketplace
Together, 2U and edX will reach over 50 million learners, serve more than 230 partners, and offer over 3,500 digital programs on the world's most comprehensive free-to-degree online education marketplace
Proceeds of the transaction will go to a nonprofit led by Harvard and MIT focused on transforming educational outcomes, tackling learning inequities
LANHAM, Md. and CAMBRIDGE, Mass., June 29, 2021 /PRNewswire/ -- 2U, Inc. (Nasdaq: TWOU), a global leader in education technology, and edX, a leading online learning platform and education marketplace, today announced they have entered into a definitive agreement to join together in an industry-redefining combination that will help power the digital transformation of higher education, expand access and affordability, and usher in a new era of online learning.
2U will acquire substantially all of edX's assets for $800M in cash. Together, 2U and edX will reach over 50 million learners globally, serve more than 230 partners, and offer over 3,500 digital programs on the world's most comprehensive free-to-degree online education marketplace.
Proceeds of the transaction will flow to the nonprofit that will continue under the leadership of edX founders Harvard and MIT and will be dedicated to reimagining the future of learning for people at all stages of life, addressing educational inequalities, and continuing to advance next generation learning experiences and platforms. Drawing on insights gained at Harvard, MIT, and other institutions, this organization will develop strategies and partnerships to help close the learning gap.
The transaction will bring together the unique strengths and complementary capabilities of two major forces in online education. 2U is the digital transformation partner of choice for more than 80 of the world's leading universities and expects to approach $1 billion in yearly revenue by the end of 2021, and edX has built one of the world's strongest online education brands and largest global communities of learners. Over the past decade, 2U and edX have each built mission-driven organizations grounded in the belief that online education and greater access to the world's best nonprofit universities can change lives and impact generations to come. The combined scale, reach, capabilities, marketing efficiency, and relationships of 2U and edX will unlock unprecedented opportunities to reach and serve more learners, universities, and employers worldwide.
"2U and edX were founded on a shared vision that online education has the power to expand access, create opportunity, and transform lives," said 2U Co-Founder & CEO Christopher "Chip" Paucek. "Alongside university partners and contributing faculty, Anant Agarwal and the edX team have built an innovative, respected, and globally recognized destination for online higher education. By combining 2U and edX's global reach and offerings from free to degree, together we believe we can fully realize our shared vision, meet the growing worldwide demand for online education, and deliver growth and long-term value to shareholders and other stakeholders."
Fulfilling a commitment to preserve and advance the edX mission, 2U plans to operate edX as a public benefit entity, a class of purpose-driven organizations that balances the interests of shareholders with other stakeholders. 2U has also committed to continuing to fulfill the edX mission by, among other things, guaranteeing affordability through the continuation of a free track to audit courses; protecting the intellectual property rights of faculty and universities that contribute massive open online courses; ensuring that participating colleges and universities may continue under their standing agreements with edX; protecting the privacy of individual data for all learners who use the edX platform; and contributing to the ongoing development of the fully open source and independent platform Open edX, owned by the nonprofit led by MIT and Harvard.
"As edX looks to its next phase of growth and impact, joining forces with 2U marks a major milestone in our evolution," said Anant Agarwal, Founder and CEO of edX and MIT Professor. "2U's people, technology, and scale will expand edX's ability to deliver on its mission of providing access to high-quality education to enable all learners to unlock their potential. Together with our university and institutional partners, we will continue to reimagine education in ways that transform the lives of global citizens and positively impact generations to come."
"Our universities founded edX nearly ten years ago to raise the aspirations for online education and make university courses accessible to learners around the world, and it has been enormously gratifying to watch that vision blossom. Today's announcement will carry forward this mission on a whole new scale, connecting many more learners with a wider range of high-quality options for content, credentials, and degrees. With online education rapidly changing, it's the right moment for this leap of evolution for edX," said Harvard president Larry Bacow and MIT president Rafael Reif in a joint statement. "At the same time, the nonprofit that emerges from this transaction will enable us and our partners to support innovation that enhances learning for all and, we hope, play a catalytic role in closing the learning gap that exists for far too many."
Unlocking opportunity for learners, universities, and employers worldwide
edX and 2U's combined and complementary portfolios of more than 3,500 offerings from the world's top universities and corporations will unlock new opportunities for edX's community of global learners—79% of whom reside outside the U.S.—to accelerate their learning journeys, achieve their career goals, and enrich their lives.
edX offers over 3,000 online programs, including a substantial majority of courses with a free/audit track, Masters and doctorate degrees, Professional Certificates, and MicroBachelors® programs and MicroMasters® programs.
2U powers over 500 online offerings, including short courses, boot camps, professional certificates, and undergraduate and graduate degrees, including over 95 degree offerings in licensure-based disciplines. 2U expects to offer many of these programs directly to learners through the edX.org marketplace.
With the acquisition, 2U's network will expand to include more than 230 partners—including over 185 nonprofit colleges and universitiesand 19 of the top 20 ranked universities globally. The combined capabilities of 2U and edX are expected to provide university partners with new opportunities to accelerate online growth and innovation, deliver exceptional student outcomes across the career curriculum continuum, and continue bending back the cost curve of higher education.
edX partners will continue to benefit from edX's global reach, commitment to research, as well as the open source Open edX platform, while gaining access to 2UOS, 2U's industry leading, comprehensive tech-enabled services and support in areas like marketing, field placement, career services, and digital learning design.
At the same time, edX's thriving marketplace will enable current 2U partners to efficiently reach a larger audience of global learners, offer a wider array of offerings to meet changing learner needs, and expand the impact of their institutions.
The transaction will also expand 2U's enterprise opportunity with edX for Business and edX Online Campus, creating a more robust set of solutions available to 2U and edX's combined network of enterprise customers. edX for Business complements 2U's existing array of enterprise offerings designed to close talent gaps, create diverse talent pipelines, and upskill and reskill the global workforce.
edX for Business is an on-demand enterprise training solution with thousands of courses and programs on cutting-edge, workplace-relevant topics utilized by over 1,000 leading companies globally.
edX Online Campus—edX's enterprise offering designed for universities— supports more than 850 university customers from 72 countries around the world, complementing on-campus education with a rich array of high-quality online courses coupled with data-driven learner insights.
Nonprofit aims to reimagine education, support innovation, and drive inclusion
The nonprofit led by Harvard and MIT will focus on inclusive learning and education. Guided by the efforts and insights from Harvard and MIT research on the dynamics of learning, the nonprofit will collaborate with educational institutions, governments, and other organizations to develop and evaluate new approaches to learning and pedagogy; invest in new learning models that combine the best of online and in-person; promote the adoption of best practices across the education continuum; support innovation in lifelong learning; and advance next generation learning experience platforms, including Open edX. This work will seek to improve educational outcomes and reduce inequities in education by expanding reach to historically underserved communities and preparing all learners for success.
"The transformative power of education is the single best hope for individuals and for society. Through this nonprofit initiative to reimagine learning, Harvard and MIT are uniting to tackle the kind of persistent inequities in education which the pandemic brought so starkly to light," MIT's Reif and Harvard's Bacow said. "Our hope is to tap into what we have learned about digital learning and to push the frontiers of learning toward greater equity and greater impact."
Across learner ages and stages of life, a learning-and-opportunity gap has revealed itself in variable outcomes for learners and differences in how students engage with digital spaces and tools. The nonprofit will seek out meaningful collaborations and fund initiatives that more effectively serve students from all backgrounds, identifying how to most effectively blend digital tools with in-person support for maximum impact. With these efforts, it aims to advance the field of online education with use-cases for how to meet learner goals in acquiring new skills, increasing their readiness for college, supplementing their in-person training or coursework, and improving employability.
The nonprofit will also support investment in next-generation platforms to continue to advance learning experiences as well as ensure that the Open edX platform is continually improved, remains open source, and powers a vibrant open source community.
Following the closing, 2U expects to be a significant contributor of code to the Open edX platform, and the transaction is expected to increase the impact that Open edX can have in supporting learning outcomes around the world. Open edX currently powers approximately 2,400 learning sites worldwide.
The acquisition has been approved by 2U and edX's boards of directors and the boards of MIT and Harvard. The transaction is expected to close within approximately 120 days, subject to customary closing conditions and certain regulatory and governmental approvals.
edX's team members are the foundation of the company's success to date, and 2U plans to retain all current edX employees that do not remain with the nonprofit continuing under Harvard and MIT's leadership. edX founder and CEO Anant Agarwal will continue to be deeply involved in the delivery of the edX mission and will determine his future role in the coming months.
edX worked with M. Klein and company acting as financial advisor in this transaction.
About 2U, Inc. Eliminating the back row in higher education is not just a metaphor—it's our mission. For more than a decade, 2U, Inc., a global leader in education technology, has been a trusted partner and brand steward of great universities. We build, deliver, and support more than 500 educational offerings, including undergraduate and graduate degrees, professional certificates, boot camps, and GetSmarter short courses. Together with our partners, 2U has positively transformed the lives of more than 300,000 students and lifelong learners. To learn more, visit 2U.com. #NoBackRow
About edX edX is the education movement for restless learners. Together with our founding partners Harvard and MIT, we've brought together over 39 million learners, the majority of top-ranked universities in the world, and industry-leading companies onto one online learning platform that supports learners at every stage. And we're not stopping there — we're relentlessly pursuing our vision of a world where every learner can access education to unlock their potential, without the barriers of cost or location.
About Harvard and MIT Two of the world's leading universities, Harvard and MIT founded edX in 2012 with a vision of extending access to rigorous university courses to people everywhere. Together, they invested $80M to grow edX from the ground up, and helped build the team that attracted university and institutional partners around the world to the platform, ultimately reaching more than 39 million learners with over 120 million courses taken. Based two miles apart in Cambridge, Mass., the two universities will now work to build a nonprofit as a next-generation contribution to online learning.
Cautionary Language Concerning Forward-Looking Statements
This press release contains forward-looking statements regarding 2U, Inc. ("2U", the "Company" or "our"), edX Inc., 2U's acquisition of edX, Inc. (the "Acquisition") and future business expectations, strategy and intentions all of which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained herein, including statements regarding future results of operations and financial position of 2U, including financial targets, business strategy, and plans and objectives for future operations, are forward-looking statements. 2U has based these forward-looking statements largely on its estimates of its financial results and its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs as of the date hereof. The company undertakes no obligation to update these statements as a result of new information or future events. These forward-looking statements are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from the results predicted, including, but not limited to: risks related to the Acquisition, including failure to obtain applicable regulatory and governmental approvals in a timely manner or at all, integration risks and failure to achieve the anticipated benefits of the Acquisition, trends in the higher education market and the market for online education, and expectations for growth in those markets; the acceptance, adoption and growth of online learning by colleges and universities, faculty, students, employers, accreditors and state and federal licensing bodies; the impact of competition on the company's industry and innovations by competitors; the company's ability to comply with evolving regulations and legal obligations related to data privacy, data protection and information security; the company's expectations about the potential benefits of its cloud-based software-as-a-service technology and technology-enabled services to university clients and students; the company's dependence on third parties to provide certain technological services or components used in its platform; the company's expectations about the predictability, visibility and recurring nature of its business model; the company's ability to meet the anticipated launch dates of its degree programs, short courses and boot camps; the company's ability to acquire new university clients and expand its degree programs, short courses and boot camps with existing university clients; the company's ability to successfully integrate the operations of its acquisitions, including edX and Trilogy, to achieve the expected benefits of its acquisitions and manage, expand and grow the combined company; the company's ability to refinance its indebtedness on attractive terms, if at all, to better align with its focus on profitability; the company's ability to service its substantial indebtedness and comply with the covenants and conversion obligations contained in the indenture governing its convertible senior notes and the credit agreement governing its revolving credit facility; the company's ability to generate sufficient future operating cash flows from recent acquisitions to ensure related goodwill is not impaired; the company's ability to execute its growth strategy in the international, undergraduate and non-degree alternative markets; the company's ability to continue to recruit prospective students for its offerings; the company's ability to maintain or increase student retention rates in its degree programs; the company's ability to attract, hire and retain qualified employees; the company's expectations about the scalability of its cloud-based platform; potential changes in regulations applicable to the company or its university clients; the company's expectations regarding the amount of time its cash balances and other available financial resources will be sufficient to fund its operations; the impact and cost of stockholder activism; the impact of any natural disasters or public health emergencies, such as the coronavirus disease 2019 ("COVID-19") pandemic; the company's expectations regarding the effect of the capped call transactions and regarding actions of the option counterparties and/or their respective affiliates; and other factors beyond the company's control. These and other potential risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed under the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2020, and other SEC filings. Moreover, 2U operates in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for 2U management to predict all risks, nor can 2U assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements 2U may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated.