Note 4 – Acquisition

The Learning House, Inc.

On November 1, 2018, we completed the acquisition of 100% of the outstanding stock of The Learning House, Inc. (“Learning House”) a diversified education services provider. Headquartered in Louisville, KY, Learning House provides online program management services including graduate and undergraduate programs; short courses, boot camps, and other skills training and credentialing for students and professionals; pathway services for international students; professional development services for teachers; and learning solutions for corporate clients. The combination of Learning House and Wiley Education Services creates a leading provider of tech-enabled education services for colleges and universities. The results of operations of Learning House are included in our Solutions segment.

The fair value of the consideration transferred was approximately $201.3 million which included $200.7 million of cash and $0.6 million of warrants, inclusive of purchase price adjustments which were finalized in the fourth quarter of fiscal year 2019. We financed the payment of the cash consideration through borrowings under our revolving credit agreement ("RCA"). The warrants were classified as equity and allow the holder to purchase 400,000 shares of our Class A Common Stock at an exercise price of $90.00, subject to adjustments. The term of the warrants is three years, expiring on November 1, 2021. The fair value of the warrants was determined using the Black-Scholes option pricing model. The fair value of the cash consideration transferred, net of $10.3 million of cash acquired was approximately $190.4 million.

The transaction was accounted for using the acquisition method of accounting. We recorded the preliminary fair value of the assets acquired and liabilities assumed on the acquisition date, all of which are included in the Solutions segment. None of the goodwill will be deductible for tax purposes. The allocation of the consideration transferred to the assets acquired and the liabilities assumed is preliminary and could be revised as a result of additional information obtained due to the finalization of the third-party valuation report, tax related matters and contingencies, but such amounts will be finalized within the measurement period, which will not exceed one year from the acquisition date. The following table summarizes the consideration transferred to acquire Learning House and the preliminary allocation of the purchase price among the assets acquired and the liabilities assumed.

	Preliminary Allocation as of April 30, 2019
Total consideration transferred	$	201,274

Assets:
Current Assets
Cash and cash equivalents		10,293
Accounts receivable, net		8,621
Prepaid expenses and other current assets		1,439
Total Current Assets		20,353

Technology, Property and Equipment, net		343
Intangible Assets, net		109,548
Goodwill		110,805
Other Non-Current Assets		5,025
Total Assets	$	246,074

Liabilities:
Current Liabilities
Accounts payable		1,542
Contract liability (Deferred revenue)		959
Accrued employment costs		4,925
Other accrued liabilities		9,422
Total Current Liabilities		16,848

Deferred Income Tax Liabilities		26,769
Other Long-Term Liabilities		1,184
Total Liabilities	$	44,801

The following table summarizes the identifiable intangible assets acquired and their weighted-average useful life at the date of acquisition.

	Estimated Fair Value		Weighted-Average Useful Life (in Years)
Customer Relationships	$	103,850		15
Course Content		5,698		4
Total	$	109,548

Learning House’s revenue and operating loss included in our Solutions segment results for the year ended April 30, 2019 was $31.5 million and $8.0 million, respectively.

Pro forma financial information related to this acquisition has not been provided as it is not material to our consolidated results of operations.

Atypon Systems, Inc.

On September 30, 2016, we acquired the net assets of Atypon, a Silicon Valley-based publishing-software company, for approximately $121 million in cash, net of cash acquired. We finalized our purchase accounting for Atypon on July 31, 2017, and there were no material changes in the purchase accounting allocation compared to April 30, 2017. We recorded the fair value of the assets acquired and liabilities assumed on the acquisition date, which included $48 million of intangible assets. Goodwill of $70 million was recorded, which is deductible for tax purposes.

Atypon's revenue included in our Research segment results for the years ended April 30, 2019, 2018 and 2017 were $36.0 million, $32.9 million and $19.1 million, respectively. Atypon's operating loss included in our Research segment results for the years ended April 30, 2019, 2018 and 2017 were $3.9 million, $2.7 million and $3.5 million, respectively.