Lego’s Parent Company Acquires Edtech Firm BrainPOP

Mergers and Acquisitions

Lego’s Parent Company Acquires Edtech Firm BrainPOP

By Daniel Mollenkamp     Oct 11, 2022

Lego’s Parent Company Acquires Edtech Firm BrainPOP

The company that owns Lego is diving headlong into K-12 education’s switch to digital.

Kirkbi A/S, the private investment and holding company that owns a controlling stake in Lego, acquired the video animation company BrainPOP for $875 million. The deal was announced Tuesday.

Fueled by the digital transformation of K-12 learning, the acquisition is expected to be only the first of many for Kirkbi A/S. The company has telegraphed its intention to make investments into “digital play and learning,” based on Lego’s desire to be a “global force for learning through play,” the announcement of the deal said.

The investment company has been eyeing edtech for some time: Kirkbi A/S has picked up about 15 minority investments in edtech firms over the past half-decade, according to reporting in The Wall Street Journal. Earlier this year, it invested about $1 billion into Epic Games, Inc.—the company that created the massively popular video game Fortnite—to spur its attempts to build up the metaverse.

According to the terms released about the latest transaction, Kirkbi A/S will assume full control of BrainPOP’s equity. But BrainPOP will remain “operationally independent.”

Scott Kirkpatrick will continue as BrainPOP’s CEO, and BrainPOP’s founder, Avraham Kadar, will stay on the board.

Kadar, a pediatric immunologist, founded the New York-based BrainPOP in 1999. The company produces animated educational videos for children about a number of subjects. These days, BrainPOP says it has a presence in two-thirds of U.S. school districts, and a reach of 25 million students.

BrainPOP's CEO, Kirkpatrick, says that he hopes that guidance from Kirkbi A/S can help the company build a more global audience for its products and sell directly to parents in addition to selling subscriptions to school districts.

But not everyone thinks the deal is a great business strategy.

Paul Nary, an assistant professor at the Wharton School of the University of Pennsylvania, expressed skepticism about the deal’s business sense.

“I understand what they think they're trying to do here, but I can't quite see how this will work for them other than as an iffy investment,” Nary wrote on Twitter.

The deal doesn’t appear to clearly establish value for BrainPOP above what could have been done with a partnership that didn’t change ownership, Nary explained to EdSurge.

It’s possible that BrainPOP will be allowed to keep growing value on its own, Nary admits, but in many cases like this “the temptation to try and extract value from the acquired company becomes too strong for the owner, especially given its own related business interests in Lego.”

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