The stock of OneSmart International Education Group Ltd. (NYSE: ONE) rose nearly 3% to $5.50 per American depositary share on Friday in early trading on the news that the company has entered a purchase agreement to acquire certain technologies and business in an effort to improve its online platform from its tutoring partner Yimi Education Technology Inc.
The Shanghai-based education provider noted in a statement today that Yimi’s technology and development have centered around big data analytics and artificial intelligence. Under the agreement, OneSmart hopes to strengthen its collaboration with Yimi, as the two parties have been operating in “several” business areas over the past five years. That includes co-testing an online-merge-offline (OMO) business model since early 2019.
OneSmart, which already owns a minority stake before today's deal with Yimi did not disclose any terms. OneSmart Online has begun rolling out its OMO model in more than 10 cities of China. The company said in its fourth-quarter financial report that the model has received “strong initial results” and intends to implement it to more cities.
"Working closely with Yimi highlights the importance of technology and premium online services as we continue to take share in the industry. The acquisition of Yimi's cutting-edge technologies and products add a key component to our premium online services and will help further improve the customer experience and the quality of our online services, Steve Zhang, the chairman and chief executive officer of OneSmart, said in a statement today.
He added, “We believe that demand in the one-on-one online education sector will continue to accelerate, and this acquisition helps lay a solid foundation for our own OMO business roll-out."
With today’s deal, OneSmart now hopes to rebound in the stock market after a tough start to the year. The stock in OneSmart fell last month to an all-time low of $4.68 per share. That occurred after OneSmart’s net loss in the three months through November widened to $15.6 million compared with $5.6 million in the same period in 2018. However, since Feb. 28 the company has not traded under $5.00 per share.
Established in 2008, OneSmart runs a K-12 education platform, which includes OneSmart VIP business, HappyMath and FasTrack English. Through the full year 2019, the company operated a network of 432 study centers across 35 cities in China.