News

EC in negotiations to acquire Embassy English

Nov 19, 2018

Malta-based English language teaching chain EC is set to acquire Embassy English, the global English language teaching chain owned by Study Group, in one of the most significant ELT industry acquisitions of the last decade.

The plan, which is subject to certain conditions and not yet finalised, has been shared with The PIE News and will mean a significantly expanded teaching operation for EC across the UK, US, Canada, Australia and New Zealand.

“I have been an advocate for consolidation in our industry at both the school and agency level for quite some time, and I believe that our intent to purchase Embassy English is the right strategic move at the right time,” commented EC’s executive chairman Andrew Mangion.

Embassy English operates adult year-round schools, junior programs under its Young Learners brand, Embassy Summer which is vacation-led programming and Embassy Academy, a boarding school summer product.

Australia and New Zealand are two countries that EC had not entered, which will immediately give the enlarged company a wider global footprint.

One Turkish agent, Selçuk Atmaca of the Academix agency, based in Istanbul, told The PIE News the effect of this new market could be hugely beneficial for EC.

“EC will take a big advantage [from the new markets] as they will enlarge their portfolio. EC is very well-known school in the Turkish market and these new locations will give students more options if they would study with EC,” he said.

“We were facing some situations… some Australian schools were not very tended to accept offshore Turkish applications. This [acquisition] also may have possibility to change this situation,” he added.

The news also means EC becomes a much larger player in the juniors market, which has proven to be the most resilient sector with consistent growth shown in national statistics over the last few years of turbulent market demand.

“We believe that consolidation will strengthen our core business and allow us to further diversify geographically without creating more competition,” commented Mangion, who added that Embassy English had a “strong and reputable brand”.

Currently, EC teaches between 40,000-45,000 students per year.

Study Group’s new CEO, Emma Lancaster, provided a statement on behalf of the selling side. She maintained the move is good for the ELT industry as a whole, and Study Group will maintain its central focus on its recruitment and pathway business.

“The proposed transaction is a strong development for the sector. Study Group will continue to focus on its core business which is unaffected by the potential sale, and EC will increase Embassy’s offer with its significant, global language teaching expertise,” she said.

The deal will mean consolidation which is needed, according to various industry commentators and follows a few years of heated competitive activity and competing commission payments rising ever upwards among the big players, as reported earlier this year.

But with schools in some of the same cities, such as Toronto, New York, San Diego, San Francisco, London and Brighton, there will be a question mark about how the syncing of two major brands will play out.

The PIE understands that company is considering closing some of Embassy’s adult schools.

One agent reaction could give insight into why this decision might be taken. Andrew Chen, chief learning officer at WholeRen Education told The PIE NewsChinese students and agents are not inclined towards the US ELT offerings, due to visa restrictions- meaning pathways are more popular.

“At this point, we have seen high visa rejection rate for the Chinese students [applying to] a single-purpose language school.

“The pure language school without a follow-up education plan is less competitive than a university-operated language program, or a pathway program,” he concluded.

But the consolidation of the two companies’ offerings could pose difficulties for EC and others, according to Atmaca. Firstly, the new organisation could cause a conflict between EC and former-Embassy regional managers, as he predicts only one will be needed once the deal is signed.

“We do not know how they will substitute their regional managers as Embassy already has its own representatives in Turkey. Each regional manager may have better personal relationships with each agency,” he posited.

Study Group is owned by Providence Equity and EC English is a Malta-based company that began life as one school and achieved scale via acquisition.

Interviewed in 2013, Mangion said his ambition was to become “the Apple of this industry”.

Details of the acquisition are still being finalised and The PIE will update as it learns more.

Source: The Pie News