After announcing an equity move, Visionary Education Technology Holdings Group Inc. (Nasdaq: VEDU) is gaining on the charts today, up 8.71% to trade at $0.7999 at the most recent check.
What maneuvers has VEDU been employing?
Visionary Education Technology (VEDU) declared that it signed a non-binding Letter of Intent (the “LOI”) on October 30, 2022. Visionary Education Technology signed the letter of intent (LOI) in order to purchase at least 85% of Shanghai Heerbanti Education Technology Co., Ltd. (“HEBT” equity). HEBT is a Shanghai-based provider of educational services that helps students and working adults in China prepare for the Graduate Management Admission Test (“GMAT”) as part of graduate business applications.
This proposed transaction matches the Company’s development goals to increase the variety of educational products and services it offers, which is consistent with VEDU’s corporate mission to pursue sustainable growth by acquiring additional high-quality education services businesses. According to the LOI, VEDU plans to buy HEBT’s equity investment in three phases.
For a 35% ownership interest in HEBT, Visionary Education Technology plans to purchase US$2,748,401 in its common shares at a price of $4 per share in the first stage of the deal, which is anticipated to completion by November 30, 2022.
If HEBT generates the targeted net income for the year ending December 31, 2022, VEDU plans to pay US$4,947,121 in its ordinary shares in the second stage for an additional 35% equity interest in HEBT, and US$2,983,040 in its ordinary shares in the third stage for an additional 15% equity interest in HEBT, assuming HEBT generates the targeted net income for the year ending December 31, 2023.
At the third stage, VEDU will have the opportunity to purchase 15% to 30% of the equity interests in HEBT. The Company’s due diligence, negotiations, additional review, and signing of a formal agreement are all conditions precedent to the LOI.
How will VEDU be benefitting from the agreement?
Visionary Education Technology (VEDU) hopes that the signing of the LOI to purchase HEBT would strengthen its position in the Chinese postgraduate education sector. The creative test preparation strategy used by HEBT and its track record of exam success place it in the top tier of the industry. As a result, HEBT expects to grow the number of students enrolled in its high-quality educational programs and training services.