Renaissance Learning Inc., a Wisconsin-based provider of educational software, yesterday announced plans to merge with AlphaSmart Inc., a maker of portable word processors for students. The $57 million marriage is just the latest in a swath of industry moves intended to advance the trend toward one-to-one computing in the nation’s schools.
Under the agreement, unanimously approved by the boards of directors of both companies, Renaissance will continue to provide AlphaSmart products to the more than 8,000 school districts already using the tools nationwide. The company also said it would begin looking at ways to package its suite of educational software solutions with the popular handheld devices, giving students in more than 67,000 schools the chance to access custom educational content in the palms of their hands.
“The addition of AlphaSmart’s exceptional product line and talented professional staff will strengthen and diversify Renaissance Learning’s position as a leading provider of learning information systems to schools,” said John Hickey, president and chief executive officer of Renaissance Learning. “Together, we will be able to provide unique breakthrough solutions to help educators develop student writing skills along with strengthening other Renaissance solutions, where limited computer access is a bottleneck to daily program use.”
Company executives said the merger would have no immediate impact on the products and services offered by the two companies and that existing leadership teams would remain intact. In the future, Hickey said, Renaissance will offer drill and practice programs for its latest writing intervention tool, as well as for its popular Accelerated Reader product, by way of select AlphaSmart devices.
Hickey said the ability to download the programs to a portable computer companion such as AlphaSmart’s Dana or Neo would help schools overcome many of the inequities that result from a lack of classroom computers.
Though educators would love to be able to provide a desktop or laptop computer for every student, he said, the reality is that most schools can’t afford that type of investment. With AlphaSmart, he explained, educators soon will be able to download information from their PCs or laptops directly to the portable devices, giving each student in the classroom unfettered access to the latest interventions. But customers, he said, aren’t likely to see these and other innovations until later in the 2005-06 school year.
Renaissance isn’t the first educational service provider to make overtures toward the handheld computing market. As educators begin to see the value of one-to-one computing in the nation’s classrooms, inking multimillion-dollar laptop initiatives and expanding the use of handheld devices such as the Palm and PocketPC, several ed-tech companies have formed similar alliances combining the ubiquity of handhelds with an overarching need for more individualized instruction and assessment.
In June, Roseville, Calif.-based PASCO Scientific Inc., a provider of instructional and lab materials for science classes, acquired ImagiWorks Inc., which specializes in science and math programs for the Palm operating system.
PASCO executives said the merger was fueled by industry expectations that the number of handhelds in education would grow exponentially in the next two years.
At the time of that merger, market research firm IDC said K-12 public schools would spend approximately $175 million on handhelds in the current school year and nearly $300 million by the 2005-06 school year.
Other educational companies, including Scantron Corp., the testing and assessment giant known for its bubble-style scoring sheets, also have sought out partnerships with makers of handheld educational software products and services.
Still other companies branching out into the handheld marketplace include textbook maker McGraw-Hill and Franklin Electronic Publisher Inc., long known for its line of handheld video and travel games.
Introduced in 1992 by a group of former Apple Computer engineers, AlphaSmart products, including the Dana and ultra-portable Neo, are intended to enhance students’ mastery of critical skills from writing and keyboarding to basic comprehension.
Renaissance Learning is perhaps best-known as the maker of Accelerated Reader, the reading software program reportedly used in more than 55,000 schools. Among the company’s various other offerings are solutions intended to boost math and writing instruction, as well as student assessment and teacher-parent communication.
More recently, the firm introduced Renaissance Place, an integrated, web-based student information system designed to track student performance in relation to Adequate Yearly Progress as required by the federal No Child Left Behind Act of 2001.
A longtime provider of research-based learning systems, school improvement programs, teacher training, and consulting services, Renaissance contends it has sought to empower educators with the kind of continuous feedback that helps motivate students by accelerating learning, boosting test scores, and coordinating learning with state standards.
“By offering AlphaSmart portable computer-companion products with Renaissance Learning software, we will be able to help K-12 districts leverage the use of their existing classroom computers, thereby increasing the value derived from their technology investment,” said Ketan D. Kothari, chairman and chief executive officer of AlphaSmart. “Our solutions are highly complementary, and we expect that this merger will help grow the revenues of the combined companies and accelerate learning of writing and other subjects.”
Hickey estimates the merger will save the combined entity at least $1 million, thanks to a reduction in costs and redundancy attributed to the consolidation.
Structured as a tax-free reorganization, the deal, which is expected to be completed in the second quarter of 2005, will pay every AlphaSmart stockholder $3.75 per share. Stockholders will have the option to be paid in cash, stock, or a combination of the two.
The final agreement, subject to approval by AlphaSmart shareholders, also awaits official go-ahead from the federal government.
At press time, AlphaSmart stock, which trades on the NASDAQ, was up nearly 7 cents to $3.62 a share.
Renaissance Learning Inc.