Sanoma acquires Santillana Spain, a leading Spanish provider of K-12 learning materials
Sanoma Corporation, Inside Information, 19 October 2020 at 8:55 EET
Sanoma acquires Santillana Spain, a leading Spanish provider of K-12 learning materials
Sanoma has signed an agreement to acquire Santillana Spain, a leading Spanish provider of K-12 learning materials, from Promotora de Informaciones S.A. (Grupo Prisa). With this acquisition, Sanoma significantly expands its position in the Spanish K-12 learning services market, which is one of the largest in Europe. Net sales of the acquired business were EUR 128 million and pro forma adjusted EBITDA was EUR 50 million in 2019, which was the peak year of the current curriculum. During the current curriculum in 2016–2019, Santillana Spain’s annual net sales were EUR 122 million, and operational EBITDA EUR 48 million on average. The agreed enterprise value of the acquired business is EUR 465 million, corresponding to a multiple of 9.3 (EV / Pro forma adjusted EBITDA 2019). The transaction is expected to be finalised during H1 2021.
Strategic rationale of the acquisition: A significant step in growing Sanoma’s learning business in Europe
With the acquisition of Santillana Spain, Sanoma obtains a leading position in the learning content market in Spain, where it already operates in learning content distribution as well as in digital platforms for teaching and administration through Iddink Spain and Clickedu, both acquired in 2019. Spain is one of the largest educational markets in Europe with 6.4 million students in primary, secondary and vocational education, and an annual spend in K-12 learning materials of approx. EUR 600 million, including both public and private funding. The Spanish K-12 learning content market has proven to be resilient throughout economic cycles as well as during the ongoing coronavirus pandemic. Santillana Spain operates in all educational regions in Spain, which is a relatively fragmented market partially due to its 17 educational regions, each running its own curriculum.
“I am very pleased to announce our acquisition of Santillana Spain, a leading provider of learning materials in Spain and a company with an experienced, long-standing and dedicated management team. This acquisition is a strong next step in Sanoma’s strategic transformation into a growing European learning company and a leading cross-media company in Finland. It will grow Learning’s share of the Group’s earnings (operational EBIT excl. PPA) from 55% to over 65% and further strengthen our cash flow generation capabilities,” says Susan Duinhoven, President and CEO of Sanoma. “We see great potential in the Spanish market, related not only to the upcoming curriculum renewal expected to be implemented in 2022–23 but also to increasing digitalisation, which has been further stimulated by extensive use of remote learning during the coronavirus pandemic. We are planning to use our solid experience in highly digitalised countries and our digital platforms developed over the past 10 years to accelerate growth of Santillana Spain over time,” she continues.
About Santillana Spain
Santillana Spain is part of Santillana Group, which is the learning business division of Grupo Prisa, the world’s leading Spanish and Portuguese-language media group in the creation and distribution of media and learning content. Santillana Spain is a leading provider of learning materials, primarily textbooks, for primary and secondary education in Spain. It offers schools, students and parents recognised and reputable high-quality learning content under well-known brands, such as Santillana, Loqueleo and Richmond, which Sanoma will have the right to use through exclusive license agreements. In total, K-12 represents approx. 90% and primary education approx. 65% of Santillana Spain’s net sales, offering the business high resilience over-the-cycle.
Adjusted key figures of the acquired business (pro forma, preliminarily adjusted for IFRS, unaudited)
|EUR million||FY 2019||FY 2018||Annual average
|Operational EBIT excl. PPA||43||33||37|
|Free cash flow||27||23||27|
In 2019, net sales and earnings of Santillana Spain grew significantly as demand for the current curriculum K-12 learning materials peaked. In 2020–21, a typical cyclical decline in market demand for K-12 learning materials is expected ahead of the introduction of the new curriculum. This is expected to result in lower net sales and earnings of Santillana Spain compared to 2019. The introduction of a new curriculum is expected to accelerate demand in 2022–23 as part of the enactment of a new educational law in Spain, the LOMLOE, which is currently going through the parliamentary approval process.
The value of the acquired net assets on the seller’s balance sheet was EUR 147 million at the end of June 2020 (2019: 144), of which intangible assets represented EUR 15 million (2019: 13). As of the end of June 2020, the acquired business had 570 employees (31 Dec 2019: 568 FTE). They will become employees of Sanoma Learning after the closing of the acquisition.
Sanoma estimates that the acquisition will create run-rate net annual synergies of approx. EUR 4 million. The synergies are expected to be realised in full by 2023 and mainly relate to procurement, technology as well as shared operations and support functions.
Purchase price and financing of the acquisition
The agreed enterprise value of the acquired business is EUR 465 million, including EUR 53 million of net debt at the end of June 2020. The enterprise value represents an EV / pro forma adjusted EBITDA 2019 multiple of 9.3. Sanoma will receive the cumulative free cash flow of Santillana Spain from 30 June 2020 until the closing of the transaction (the so-called locked box mechanism).
Sanoma will finance the acquisition fully with debt and has signed a committed bridge financing facility of EUR 480 million with Nordea Bank Abp and OP Corporate Bank plc. Subsequently, Sanoma will convert the bridge facility into long-term funding.
The transaction is subject to approval by the General Meeting of Shareholders of Grupo Prisa and obtaining the necessary consents from the creditors of Grupo Prisa, with the majority of whom an agreement has been reached. The Board of Directors of Grupo Prisa has unanimously approved the transaction. The transaction will be discussed with the Spanish competition authorities.
The transaction is expected to be finalised during H1 2021. After closing, the acquired business will be reported as part of Sanoma Learning SBU. Sanoma will book approx. EUR 2 million of transaction costs as items affecting comparability (IACs) in Sanoma Learning’s Q4 2020 result. The remaining transaction costs of approx. EUR 4 million will be booked at closing.
News conference for analysts and investors
Sanoma will host a webcast about the transaction for analysts and investors in English today, 19 October at 14:00 EET (13:00 CET). President and CEO Susan Duinhoven will present the transaction, followed by a Q&A session together with CFO & COO Markus Holm. As Sanoma is currently in the middle of the silent period preceding its Q3 2020 Interim Report, which will be published on 29 October, the presentation and Q&A session will focus solely on the transaction announced and no other issues will be discussed during the event.
The webcast can be followed via www.sanoma.com/investors. Questions can be asked verbally or in writing. Detailed instructions for placing a question are given after signing in to the webcast platform.
The presentation material will be available at www.sanoma.com/investors when the webcast starts, and an on-demand replay of the webcast shortly after the end of the live event.
Media may interview the President and CEO Susan Duinhoven about the transaction via Teams after the webcast. As Sanoma is currently in the middle of the silent period preceding its Q3 2020 Interim Report, which will be published on 29 October, the interviews will focus solely on the transaction announced and no other issues will be discussed. To book an interview, please contact Communications Director Marcus Wiklund, mobile +358 400 603 147, email firstname.lastname@example.org.
Investors: Kaisa Uurasmaa, Head of Investor Relations and CSR, Sanoma Corporation tel. +358 40 560 5601
Media: Christel Lammertink, Communications Manager, Sanoma Learning, tel. +31 6 5715 3456
Sanoma is an innovative and agile learning and media company impacting the lives of millions every day.
Our learning products and services enable teachers to develop the talents of every child to reach their full potential. We offer printed and digital learning content as well as digital learning and teaching platforms for primary, secondary and vocational education, and want to grow our business across Europe.
Our Finnish media provide independent journalism and engaging entertainment also for generations to come. Our unique cross-media position offers the widest reach and tailored marketing solutions for our business partners.
Today, we operate in eleven European countries and employ close to 4,500 professionals. In 2019, our net sales totalled 900m€ and our operational EBIT margin excl. PPA was 14.8%. Sanoma shares are listed on Nasdaq Helsinki. More information is available at www.sanoma.com.