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Acquisitions

12 Months Ended

Apr. 30, 2020

Note 4 – Acquisitions

Fiscal Year 2020

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

mthree

On January 1, 2020, we completed the acquisition of 100% of the outstanding stock of mthree. mthree is a rapidly growing education services provider that addresses the IT skills gap by finding, training and placing job-ready technology talent in roles with leading corporations worldwide. Its results of operations are included in our Education Services segment.

The preliminary fair value of the consideration transferred at the acquisition date was $128.6 million (£97.5 million) which included $122.2 million of cash and $6.4 million of additional consideration to be paid after the acquisition date. We financed the payment of the cash consideration primarily through borrowings under our Amended and Restated RCA (as defined below in Note 14, “Debt and Available Credit Facilities”) and using cash on hand. The fair value of the cash consideration transferred including those amounts paid after the acquisition date, net of $2.2 million of cash acquired was approximately $126.4 million.

At the time of the acquisition, Wiley entered into agreements with certain employees of mthree who will remain employees after the acquisition. Cash payments will be made based on reaching certain revenue and EBITDA targets in each year over a four-year period. Such payments are subject to continuing employment and would therefore be considered compensation expense for services provided subsequent to the acquisition. Such expense would be recognized when it becomes probable that the targets will be achieved.

The mthree acquisition was accounted for using the acquisition method of accounting. The excess purchase price over identifiable net tangible and intangible assets has been recorded to Goodwill in our Consolidated Statements of Financial Position as of April 30, 2020. The fair value assessed for the majority of the tangible assets acquired and liabilities assumed equaled their carrying value. Goodwill represents synergies and economies of scale expected from the combination of services. We recorded the preliminary fair value of the assets acquired and liabilities assumed on the acquisition date. None of the goodwill will be deductible for tax purposes. The acquisition related costs to acquire mthree were expensed when incurred and were approximately $1.3 million. Such costs were primarily allocated to the Education Services segment and are reflected in Operating and Administrative Expenses on the Consolidated Statements of (Loss) Income in the year ended April 30, 2020.

mthree’s revenue and operating loss included in our Education Services segment results for the year ended April 30, 2020 was $17.5 million and $1.7 million, respectively.

The following table summarizes the preliminary consideration transferred to acquire mthree and the preliminary allocation of the purchase price among the assets acquired and liabilities assumed.

	Preliminary Allocation
Total cash consideration transferred	$	122,242

Assets:
Current Assets		8,750
Technology, Property and Equipment, net		484
Intangible Assets, net		56,836
Goodwill		82,561
Operating Lease Right-of-Use Assets		3,710
Total Assets	$	152,341

Liabilities:
Current Liabilities		14,380
Deferred Income Tax Liabilities		12,722
Operating Lease Liabilities		2,692
Other Long-Term Liabilities		305
Total Liabilities	$	30,099

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	$	48,792		12
Trademarks		6,725		10
Content		1,319		4
Total	$	56,836

The allocation of the total 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, leases and related commitments, tax related matters and contingencies and certain assets and liabilities, including receivables and payables, but such amounts will be finalized within the measurement period, which will not exceed one year from the acquisition date.

Zyante Inc.

On July 1, 2019, we completed the acquisition of Zyante Inc. (“zyBooks”), a leading provider of computer science and STEM education courseware. The results of operations of zyBooks is included in our Academic & Professional Learning segment results. The fair value of the consideration transferred at the acquisition date was $57.1 million which included $55.9 million of cash and $1.2 million of additional consideration to be paid after the acquisition date, inclusive of purchase price adjustments which were finalized in the three months ended January 31, 2020. The fair value of the cash consideration transferred including those amounts paid after the acquisition date, net of $1.8 million of cash acquired was approximately $54.7 million.

The zyBooks acquisition was accounted for using the acquisition method of accounting. The excess purchase price over identifiable net tangible and intangible assets has been recorded to Goodwill in our Consolidated Statements of Financial Position as of April 30, 2020. The fair value assessed for the majority of the tangible assets acquired and liabilities assumed equaled their carrying value. Goodwill represents synergies and economies of scale expected from the combination of services. Goodwill has been allocated to the Academic & Professional Learning segment. None of the goodwill will be deductible for tax purposes. zyBooks revenue included in our Academic & Professional Learning segment results for the year ended April 30, 2020 was $13.5 million.

The following table summarizes the consideration transferred to acquire zyBooks and the allocation of the purchase price among the assets acquired and liabilities assumed.

	Final Allocation
Total cash consideration transferred	$	55,939

Assets:
Current Assets		2,280
Technology, Property and Equipment, net		28
Intangible Assets, net		24,500
Goodwill		36,903
Total Assets	$	63,711

Liabilities:
Current Liabilities		2,581
Deferred Income Tax Liabilities		5,191
Total Liabilities	$	7,772

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

	Fair Value		Weighted- Average Useful Life (in Years)
Developed Technology	$	10,400		7
Customer Relationships		6,800		10
Content		4,400		10
Trademarks		2,900		10
Total	$	24,500

The allocation of the consideration transferred to the assets acquired and the liabilities assumed is final.

Other Acquisitions

The preliminary fair value of cash consideration transferred during the year ended April 30, 2020 for all other acquisitions was approximately $48.5 million. These other acquisitions were accounted for using the acquisition method of accounting as of their respective acquisition dates. The excess purchase price over identifiable net tangible and intangible assets of $27.9 million has been recorded to Goodwill in our Consolidated Statement of Financial Position as of April 30, 2020, and $27.7 million of intangible assets subject to amortization have been recorded, including customer relationships, developed technology and content that are being amortized over estimated weighted average useful lives of 8, 5 and 10, respectively. The fair value assessed for the majority of the tangible assets acquired and liabilities assumed equaled their carrying value. Goodwill represents synergies and economies of scale expected from the combination of services. Goodwill of $8.5 million has been allocated to the Academic & Professional Learning segment, and $19.4 million has been allocated to the Research Publishing & Platforms segment. The revenue for the year ended April 30, 2020 related to these other acquisitions was approximately $9.7 million.

On April 1, 2020, we completed the acquisition of Bio-Rad Laboratories Inc.’s Informatics products including the company’s spectroscopy software and spectral databases (“Informatics”). The results of Informatics are included in our Research Publishing & Platforms segment results.

On March 2, 2020, we completed the acquisition of Madgex Holdings Limited (“Madgex”), a market-leading provider of advanced job board software and career center services. The results of Madgex are included in our Research Publishing & Platforms segment results.

The allocation of the total consideration transferred to the assets acquired and the liabilities assumed for Informatics and Madgex is preliminary, and could be revised as a result of additional information obtained due to the finalization of the third-party valuation report, leases and related commitments, tax related matters and contingencies and certain assets and liabilities, including receivables and payables, but such amounts will be finalized within the measurement period, which will not exceed one year from the acquisition dates.

On May 31, 2019, we completed the acquisition of certain assets of Knewton, Inc. (“Knewton”). Knewton is a provider of affordable courseware and adaptive learning technology. The results of Knewton are included in our Academic & Professional Learning segment results. The allocation of the consideration transferred to the assets acquired and the liabilities assumed for Knewton is final.

We also completed the acquisition of two immaterial businesses, which are included in our Research Publishing & Platforms segment, one immaterial business included in our Academic & Professional Learning segment results and one immaterial business in our Education Services business.

Fiscal Year 2019

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. The results of operations of Learning House are included in our Education Services segment. 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 fair value of the consideration transferred was $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 three months ended April 30, 2019. We financed the payment of the cash consideration through borrowings under our RCA (as defined below in Note 14, “Debt and Available Credit Facilities”). 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 final fair value of the cash consideration transferred, net of $10.3 million of cash acquired was $190.4 million.

The transaction was accounted for using the acquisition method of accounting. We recorded the fair value of the assets acquired and liabilities assumed on the acquisition date, all of which are included in the Education Services segment. None of the goodwill is deductible for tax purposes. The allocation of the consideration transferred to the assets acquired and the liabilities assumed is final.

The following table summarizes the consideration transferred to acquire Learning House and the allocation of the purchase price among the assets acquired and the liabilities assumed.

	Final Allocation
Total consideration transferred	$	201,274

Assets:
Current Assets		20,353
Technology, Property and Equipment, net		343
Intangible Assets, net		109,548
Goodwill		110,966
Other Non-Current Assets		5,025
Total Assets	$	246,235

Liabilities:
Current Liabilities		16,999
Deferred Income Tax Liabilities		26,778
Other Long-Term Liabilities		1,184
Total Liabilities	$	44,961

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

	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 Education Services 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.