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Voyager Learning Evaluating Sales Opportunity
By Mukta Ohri
January 21, 2008
Important Details: After year-end rumors, Voyager Learning has confirmed that it has hired Allen & Co. to investigate strategic alternatives, including a possible sale of the company. Voyager accounts for the remnants of Proquest’s Education Division (see Insights 22 December 2006, Proquest: Focus Now Solely on Schools), and has estimated annual revenues of $185 million.
In addition to the “flagship” Voyager Expanded Learning product, a mixed solution set of curricular, supplemental, and professional development programs, Voyager’s product portfolio include internet-based reading materials (Learning A-Z) and math and science simulation programs (ExploreLearning).
Implications: As the first notable M&A potential of 2008, Voyager serves as an imperfect, but directional, bellwether of the state of the Education industry and the impacts from economic conditions in the US resulting from the now-familiar triad of subprime costs, tightening credit channels, and concerns over recession. The increased pressure on acquisition underwriting requires not only a stronger heart but also a stronger business case and promise of returns.
Voyager’s “annus horribilis” complicates the picture, with accounting irregularities, ongoing litigation, and unfavorable media coverage of alleged improprieties with government sourcing and performance issues. Voyager’s products have lost some of the lustre of earlier years (see Insights 17 December 2004, Proquest Enters School Curriculum Market with $360m+ Voyager Acquisition), but the underlying premise, and appeal, of remediation and intervention services is still viable. Even as the textbook market consolidates further with the Houghton Mifflin/Harcourt transaction (see Insights 20 July 2007, Houghton Mifflin to Aqcuire Harcourt), the long-tailed supplemental publishing segment is still a growth industry, with NCLB continuing to prop up a forecasted 5.7% CAGR between 2007-2010.
In more ordinary times, a Voyager acquisition could fit into any number of scenarios - ingestion by a global player, the combination of like-minded low-market players to achieve critical mass and market share, or the continued intersection of technology and content players to leverage the evolving digitization of education. Given the larger context, final resolution of Allen & Co.’s “investigation of strategic alternatives” will shed light on the current balancing point between risk and reward.