ARCE - Arco Platform to acquire isaac in all-stock deal

Arco Platform ( NASDAQ: ARCE ) said Thursday it will acquire remaining 75.1% stake in isaac, a Brazilian provider of financial and software solutions to K-12 schools, which it said would make it the world's largest operating system for schools.

ARCE already holds 24.9% stake in isaac.

The purchase price will be paid in the form of ARCE equity interests. isaac shareholders will receive ~10.4M ARCE shares, which will equal ~15.8% of ARCE's issued and outstanding equity interests immediately after the deal closes.

The deal's equity value to annual recurring revenue multiple as of Aug. was 2.7x2. The deal will result in ~14.2% dilution for current ARCE shareholders.

The acquisition significantly expands ARCE's footprint in Brazil by increasing the scope of its portfolio of products.

The deal increases ARCE's total addressable market with the addition of a new vertical with high growth potential and strong unit economics, and accelerates isaac's growth through cross-sell opportunities in ARCE's large school base.

After the deal closes, isaac will become an operating unit of ARCE and will continue to be led by its founders David Peixoto and Ricardo Sales.

The deal is expected to close within FY22.

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