Rosetta Stone To Buy Lexia Learning For $22.5 Mln Cash

(RTTNews) - Rosetta Stone Inc. (RST) said Thursday that it has agreed to buy Lexia Learning Systems, Inc., whose innovative English reading products are used in over 14,000 schools and by more than one million students online, for $22.5 million in cash.

The deal marks Rosetta Stone's first extension beyond language learning and takes the company deeper into the EdTech industry. With Lexia bringing greater breadth to Rosetta Stone's K-12 Education business, the company plans to leverage Lexia's expertise in children's reading to deepen its engagement with schools and deliver its digital literacy solutions to young learners in the consumer market, both in the United States and internationally.

Lexia is the second acquisition by Rosetta Stone in 2013. In April, the company purchased Livemocha, one of the world's largest online language-learning communities, for $8.5 million.

Before considering the acquisition of Lexia, Rosetta Stone's previously issued 2013 guidance remains unchanged with revenue of $280 million to $290 million. On a combined basis, together with the contribution from Lexia before the impact of any purchase accounting adjustments, Rosetta Stone now expects 2013 pro forma revenue of $287 million to $298 million. The company expects that Lexia will contribute positive cash flow within its first full year.

With respect to Rosetta Stone's multi-year outlook, the company still expects revenue in 2015 to be $400 million.