2U Buys MIT’s and Harvard’s edX Platform for $800M; Open edX Software Kept as Non-Profit
IBL News | New York
In a surprising deal, 2U Inc. (Nasdaq: TWOU) announced today that it will purchase edX Inc. — a nonprofit founded by MIT and Harvard University — for $800 million in cash.
With the transaction, Online Program Manager (OPM) 2U will acquire all edX assets, including the brand, the website with 50 million learners, a marketplace with 230 university and corporate partners, and 3,500 digital programs.
The $800 million proceeds will flow to a new, still unnamed nonprofit led by Harvard and MIT that “will collaborate with educational institutions, governments, and other organizations to develop and evaluate new approaches to learning and pedagogy.” This non-profit will maintain the open-source platform Open edX, according to the press statement.
2U stated that it plans to operate edX under its umbrella “as a public benefit entity, a class of purpose-driven organizations that balances the interests of shareholders with other stakeholders.” It means that the new edX will operate as a for-profit company, as MIT confirmed.
The Lanham, Maryland – based company said that “it has also committed to continuing to fulfill the edX mission by, among other things, guaranteeing affordability through the continuation of a free track to audit courses.”
In addition, 2U ensured that it will contribute “to the ongoing development of the fully open-source and independent platform Open edX.”
2U and edX described the deal as “an industry-redefining combination that will help power the digital transformation of higher education, expand access and affordability, and usher in a new era of online learning.”
A themed, PR website called Transformingdigitaleducation.com was specifically created to announce the transaction.
With over 80 top universities as customers, 2U said was expecting “to approach $1 billion in yearly revenue by the end of 2021.”
In 2020, edX revenues were 84.6 million, and its operating loss $17.4 million, according to public records.
“By combining 2U and edX’s global reach and offerings from free to degree, together we believe we can fully realize our shared vision, meet the growing worldwide demand for online education, and deliver growth and long-term value to shareholders and other stakeholders,” said 2U Co-Founder & CEO, Christopher “Chip” Paucek.
“As edX looks to its next phase of growth and impact, joining forces with 2U marks a major milestone in our evolution,” said Anant Agarwal, Founder, and CEO of edX and MIT Professor.
“Today’s announcement will carry forward this mission on a whole new scale, connecting many more learners with a wider range of high-quality options for content, credentials and degrees. With online education rapidly changing, it’s the right moment for this leap of evolution for edX,” said Harvard president Larry Bacow and MIT president Rafael Reif in a joint statement. “At the same time, the nonprofit that emerges from this transaction will enable us and our partners to support innovation that enhances learning for all and, we hope, play a catalytic role in closing the learning gap that exists for far too many.”
2U said that it will contribute to supporting the Open edX platform, despite it will belong to MIT and Harvard’s new non-profit company. “Following the closing, 2U expects to be a significant contributor of code to the Open edX platform, and the transaction is expected to increase the impact that Open edX can have in supporting learning outcomes around the world. Open edX currently powers approximately 2,400 learning sites worldwide.”
2U’s people, technology, and scale will expand edX’s ability to deliver on our mission and enable all learners to unlock their potential. #freetodegree
— anant agarwal (@agarwaledu) June 29, 2021
If I were an instructor of a course published in edX, via a university partnership with the non-profit corporation once known as a consortium, I would be furious—I bet instructors cannot ask their course to be taken down, too. https://t.co/NDEKunezc8
— Lorena Barba (@LorenaABarba) June 29, 2021
• MIT’s view: MIT and Harvard agree to transfer edX to ed-tech firm 2U
Education-technology company 2U Inc., which runs graduate programs for dozens of top universities, is buying web-based course provider edX, a nonprofit founded by Harvard and MIT https://t.co/XQJsVbo5Ui
— The Wall Street Journal (@WSJ) June 29, 2021