UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

______________________

SCHEDULE 14A

______________________

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

Filed by the Registrant

 

S

Filed by a Party other than the Registrant

 

£

Check the appropriate box:

£

 

Preliminary Proxy Statement

£

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

S

 

Definitive Proxy Statement

£

 

Definitive Additional Materials

£

 

Soliciting Material Pursuant to Section 240.14a-12

EDTECHX HOLDINGS ACQUISITION CORP.
(Name of Registrant as Specified In Its Charter)

______________________________________________________________

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

£

 

No fee required.

S

 

Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and 0-11.

   

(1)

 

Title of each class of securities to which transaction applies:

       

OrdinaryShares, Warrants and Units

   

(2)

 

Aggregate number of securities to which transaction applies:

       

88,507,857

   

(3)

 

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

       

$10.27 to $11.50, based on average of high and low prices of securities

   

(4)

 

Proposed maximum aggregate value of transaction:

       

$812,798,991.39

   

(5)

 

Total fee paid:

       

$105,501.30

£

 

Fee paid previously with preliminary materials.

S

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

   

(1)

 

Amount Previously Paid:

       

$105,501.30

   

(2)

 

Form, Schedule or Registration Statement No.

       

FormS-4, Registration Statement File No. 333-235859

   

(3)

 

Filing Party:

       

MetenEdtechX Education Group Ltd.

   

(4)

 

Date Filed:

       

January 9, 2020

 

PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
OF
EDTECHX HOLDINGS ACQUISITION CORP.

PROSPECTUS FOR UP TO 77,902,857 ORDINARY SHARES
10,355,000 WARRANTS, AND 250,000 UNITS
OF
METEN EDTECHX EDUCATION GROUP LTD.

The board of directors of each of EdtechX Holdings Acquisition Corp., a Delaware corporation (“EdtechX”), Meten EdtechX Education Group Ltd., a Cayman Islands exempted company (“Holdco”), Meten Education Inc., a Delaware corporation and wholly owned subsidiary of Holdco (“EdtechX Merger Sub”), Meten Education Group Ltd., a Cayman Islands exempted company and wholly owned subsidiary of Holdco (“Meten Merger Sub”, and together with EdtechX Merger Sub, the “Merger Subs”), and Meten International Education Group, a Cayman Islands exempted company (“Meten” or “Company”) has unanimously approved the mergers contemplated by the Agreement and Plan of Reorganization, dated as of December 12, 2019 (as the same may be amended, the “Merger Agreement”), by and among EdtechX, Meten, Holdco and the Merger Subs.

Pursuant to the Merger Agreement, (i) Meten Merger Sub will merge with and into the Company, with the Company being the surviving entity of such merger (the “Meten Merger”) and becoming a wholly-owned subsidiary of Holdco (“Surviving Cayman Islands Company”) and (ii) EdtechX Merger Sub will merge with and into EdtechX, with EdtechX being the surviving entity of the merger (the “EdtechX Merger” and together with the Meten Merger, the “Mergers”) and becoming a wholly-owned subsidiary of Holdco (“Surviving Delaware Corporation”).

As a result of the Mergers, Meten and EdtechX will become wholly owned subsidiaries of Holdco and the securityholders of Meten and EdtechX will become the securityholders of Holdco.

Upon consummation of the Meten Merger, the shareholders of Meten will receive their pro rata portion of an aggregate of up to 48,391,607 Holdco Ordinary Shares (“Holdco Ordinary Shares” or “Holdco Shares”). EdtechX will be required to pay cash to electing Meten shareholders, in an amount equal to 50% of the excess of EdtechX’s remaining cash at closing over $30 million (after taking into account conversions elected by EdtechX’s public stockholders and together with the proceeds arising from private placements) up to an aggregate of $10 million (“Cash Election”). Cash consideration paid will reduce the Holdco Ordinary Shares issuable to the Meten shareholders upon closing of the Mergers. Additionally, the shareholders of Meten who continue to hold Holdco Ordinary Shares through certain earnout measurement dates will also have the right to receive their pro rata portion of up to an additional 11,000,000 Holdco Ordinary Shares (“Contingent Shares”) as follows: (i) 4,000,000 Contingent Shares if the reported closing sale price of the Holdco Ordinary Shares equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations or other similar actions) for any 20 consecutive trading days at any time before December 31, 2022, and (ii) 7,000,000 Contingent Shares if the reported closing sale price of the Holdco Ordinary Shares equals or exceeds $15.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations or other similar actions) for any 20 consecutive trading days during the fiscal year ending December 31, 2023. The earnout conditions operate independently. There is no “catch up” mechanism; Contingent Shares not earned in a prior earnout period will not be earnable in a subsequent period.

If the EdtechX Stockholders approve the merger proposal, immediately prior to the consummation of the Business Combination, all outstanding units of EdtechX (each of which consists of one share of common stock of EdtechX and one redeemable warrant of EdtechX) will separate into their individual components of shares of common stock of EdtechX and warrants of EdtechX, and each such unit will cease separate existence and trading. Upon consummation of the EdtechX Merger, (i) each share of EdtechX common stock outstanding on the closing date will be exchanged for the right to receive one Holdco Ordinary Share, except that holders of shares of EdtechX common stock sold in EdtechX’s initial public offering will be entitled to elect instead to receive a pro rata portion of EdtechX’s trust account, as provided in EdtechX’s charter documents, (ii) each outstanding warrant of EdtechX will convert into a warrant of Holdco (“Holdco Warrants”), with each Holdco Warrant entitling the holder to purchase one Holdco Ordinary Share at a price of $11.50 per share, and (iii) each outstanding unit purchase option will remain outstanding but each will be deemed to have been converted to one unit purchase option entitling the holder to purchase one unit of Holdco (“Holdco Unit”), with each such Holdco Unit consisting of one Holdco Share and one Holdco Warrant.

 

Accordingly, this prospectus covers an aggregate of 77,902,857 Holdco Ordinary Shares, 10,355,000 Holdco Warrants and 250,000 Holdco Units.

We estimate that, immediately following completion of the Mergers contemplated by the Merger Agreement, the Holdco Ordinary Shares issued to the shareholders of Meten will constitute approximately 86% of the issued and outstanding Holdco Ordinary Shares and the Holdco Ordinary Shares issued to the EdtechX stockholders will constitute approximately 14% of the issued and outstanding Holdco Ordinary Shares, assuming no conversions of EdtechX public shares, no Cash Election is made, and without taking into effect securities which may be issued pursuant to the Azimut Investment (defined below) or in a Financing (defined below). All of the Holdco Ordinary Shares to be issued and outstanding at the completion of the Mergers will be of a single class with equal rights with each Holdco Ordinary Share having one vote per share.

Proposals to approve the Merger Agreement and the other matters discussed in this proxy statement/prospectus will be presented at the annual meeting of stockholders of EdtechX scheduled to be held on March 26, 2020.

EdtechX’s units, common stock and warrants are currently listed on the Capital Market of The Nasdaq Stock Market LLC (together with “Global Market of The Nasdaq Stock Market LLC”, the “Nasdaq”) under the symbols “EDTXU,” “EDTX,” and “EDTXW,” respectively. Following the Mergers, all EdtechX units, common stock and warrants will be de-listed from Nasdaq and de-registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). On March 4, 2020, the latest practicable date before the printing of this proxy statement/prospectus, the closing sale price of EdtechX units, common stock, and warrants were $10.78, $10.31, and $0.38, respectively.

Although Holdco is not currently a public company, following the effectiveness of the registration statement of which this proxy statement/prospectus is a part and the closing of the Mergers, Holdco will become subject to the reporting requirements of the Exchange Act. Holdco intends to apply for listing, to be effective at the time of the consummation of the Mergers contemplated by the Merger Agreement, of the Holdco Ordinary Shares, Holdco Warrants and Holdco Units on Nasdaq under the symbols “METX,” “METXW” and “METXU,” respectively, and Holdco is expected to be publicly traded on Nasdaq under these symbols following the completion of the Mergers, subject to receipt of Nasdaq’s approval and official notice of issuance. It is a condition of the consummation of the Mergers that Holdco receive confirmation from Nasdaq that the Holdco Ordinary Shares and Holdco Warrants have been approved for listing. While trading on Nasdaq is expected to begin on the first business day following the date of completion of the Mergers, there can be no assurance that a viable and active trading market will develop.

Holdco will be an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, and is therefore eligible to take advantage of certain reduced reporting requirements otherwise applicable to other public companies.

Holdco will also be a “foreign private issuer” as defined in the Exchange Act and will be exempt from certain rules under the Exchange Act that impose certain disclosure obligations and procedural requirements for proxy solicitations under Section 14 of the Exchange Act. In addition, Holdco’s officers, directors and principal shareholders will be exempt from the reporting and “short-swing” profit recovery provisions under Section 16 of the Exchange Act. Moreover, Holdco will not be required to file periodic reports and financial statements with the U.S. Securities and Exchange Commission as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.

This proxy statement/prospectus provides you with detailed information about the Merger Agreement and other matters to be considered at the annual meeting of EdtechX’s stockholders. We encourage you to carefully read this entire document. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 32 of this proxy statement/prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated March 16, 2020 and is first being mailed to holders on or about March 17, 2020.

 

EDTECHX HOLDINGS ACQUISITION CORP.
c/o IBIS Capital Limited
22 Soho Square
London W1D 4NS
United Kingdom
+44 207 070 7080

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 26, 2020

Dear EdtechX Holdings Acquisition Corp. Stockholders:

You are cordially invited to attend the annual meeting of stockholders of EdtechX Holdings Acquisition Corp. (“EdtechX”) at 10:00 a.m. local time on March 26, 2020, at the offices of Graubard Miller, EdtechX’s U.S. counsel, located at The Chrysler Building, 405 Lexington Avenue, 11th Floor, New York, New York 10174.

The annual meeting will be held for the following purposes:

(1)    to consider and vote upon a proposal to adopt the Agreement and Plan of Reorganization, dated as of December 12, 2019 (“Merger Agreement”), by and among EdtechX, Meten EdtechX Education Group Ltd., a Cayman Islands exempted company (“Holdco”), Meten Education Inc., a Delaware corporation and wholly owned subsidiary of Holdco (“EdtechX Merger Sub”), Meten Education Group Ltd., a Cayman Islands exempted company and wholly owned subsidiary of Holdco (“Meten Merger Sub”, and together with EdtechX Merger Sub, the “Merger Subs”), and Meten International Education Group, a Cayman Islands exempted company (“Company”) which, among other things, provides for (i) Meten Merger Sub to merge with and into the Company, with the Company being the surviving entity of such merger (the “Meten Merger”) and becoming a wholly-owned subsidiary of Holdco (“Surviving Cayman Islands Company”) and (ii) EdtechX Merger Sub to merge with and into EdtechX, with EdtechX being the surviving entity of the merger (the “EdtechX Merger” and together with the Meten Merger, the “Mergers”) and becoming a wholly-owned subsidiary of Holdco (“Surviving Delaware Corporation”), and to approve the Mergers contemplated by the Merger Agreement as described in this proxy statement/prospectus — we refer to this proposal as the “merger proposal”;

(2)    to consider and vote upon a proposal to elect nine (9) directors to the board of directors of Holdco to serve until their successors are duly elected and qualified — we refer to this proposal as the “director proposal”;

(3)    to approve the following material differences between EdtechX’s amended and restated certificate of incorporation and Holdco’s agreement and memorandum of association to be effective upon the consummation of the business combination: (i) the name of the new public entity will be “Meten EdtechX Education Group Ltd.” as opposed to “EdtechX Holdings Acquisition Corp.”; (ii) Holdco has 500,000,000 ordinary shares authorized, as opposed to EdtechX having 25,000,000 authorized shares of common stock and 1,000,000 authorized shares of preferred stock; (iii) Holdco’s corporate existence is perpetual as opposed to EdtechX’s corporate existence terminating if a business combination is not consummated by EdtechX within a specified period of time; and (iv) Holdco’s constitutional documents do not include the various provisions applicable only to special purpose acquisition corporations that EdtechX’s charter contains — we refer to these proposals as the “charter proposals

(4)    to consider and vote upon a proposal to adjourn the annual meeting to a later date or dates, if necessary, if the parties are not otherwise able to consummate the Mergers contemplated by the Merger Agreement — we refer to this proposal as the “adjournment proposal”; and

(5)    to transact any and all other business that may properly come before the annual meeting or any continuation, postponement, or adjournment thereof.

 

These items of business are described in the attached proxy statement/prospectus, which we encourage you to read in its entirety before voting. Only holders of record of EdtechX common stock at the close of business on February 24, 2020 (the “record date”) are entitled to notice of the annual meeting and to vote and have their votes counted at the annual meeting and any adjournments or postponements of the annual meeting.

After careful consideration, EdtechX’s board of directors has determined that each of the proposals outlined above is fair to and in the best interests of EdtechX and its stockholders and recommends that you vote or give instruction to vote “FOR” each proposal. Consummation of the Mergers contemplated by the Merger Agreement is conditional on approval of each of the merger proposal, director proposal and charter proposals.

All EdtechX stockholders are cordially invited to attend the annual meeting in person. To ensure your representation at the annual meeting, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If you are a holder of record of EdtechX common stock, you may also cast your vote in person at the annual meeting. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the annual meeting and vote in person, obtain a proxy from your broker or bank.

A complete list of EdtechX stockholders of record entitled to vote at the annual meeting will be available for ten days before the annual meeting at the principal executive offices of EdtechX for inspection by stockholders during ordinary business hours for any purpose germane to the annual meeting.

Your vote is important regardless of the number of shares you own. Whether you plan to attend the annual meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

 

By Order of the Board of Directors

   

/s/ Benjamin Vedrenne-Cloquet

   

Benjamin Vedrenne-Cloquet
Chief Executive Officer

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS. PUBLIC SHAREHOLDERS ARE NOT REQUIRED TO AFFIRMATIVELY VOTE FOR OR AGAINST THE MERGER PROPOSAL IN ORDER TO HAVE THEIR SHARES CONVERTED INTO CASH. THIS MEANS THAT ANY PUBLIC SHAREHOLDER HOLDING SHARES OF EDTECHX COMMON STOCK MAY EXERCISE CONVERSION RIGHTS REGARDLESS OF WHETHER THEY VOTE ON THE BUSINESS COMBINATION PROPOSALS OR IF THEY ARE A HOLDER OF RECORD ON THE RECORD DATE. TO EXERCISE CONVERSION RIGHTS, HOLDERS MUST TENDER THEIR SHARES TO CONTINENTAL STOCK TRANSFER & TRUST COMPANY, EDTECHX’S TRANSFER AGENT, NO LATER THAN TWO (2) DAYS PRIOR TO THE ANNUAL MEETING. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING CONTINENTAL STOCK TRANSFER & TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE MERGERS ARE NOT COMPLETED, THEN THESE SHARES WILL NOT BE CONVERTED INTO CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR CONVERSION RIGHTS. SEE “ANNUAL MEETING OF EDTECHX STOCKHOLDERS — CONVERSION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.

This proxy statement/prospectus is dated March 16, 2020 and is first being mailed to EdtechX Holdings Acquisition Corp. stockholders on or about March 17, 2020.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on March 26, 2020: EdtechX’s proxy statement/prospectus are available at http://www.cstproxy.com/edtechxcorp/2020.

 

TABLE OF CONTENTS

 

Page

SUMMARY OF THE MATERIAL TERMS OF THE MERGERS

 

1

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

 

4

SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

 

10

SELECTED HISTORICAL FINANCIAL INFORMATION

 

23

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

28

COMPARATIVE PER SHARE INFORMATION

 

30

RISK FACTORS

 

32

FORWARD-LOOKING STATEMENTS

 

82

ANNUAL MEETING OF EDTECHX STOCKHOLDERS

 

83

THE MERGER PROPOSAL

 

87

THE MERGER AGREEMENT

 

104

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

111

THE DIRECTOR PROPOSAL

 

120

EXECUTIVE COMPENSATION

 

126

THE CHARTER PROPOSALS

 

130

COMPARISON OF CORPORATE GOVERNANCE AND SHAREHOLDER RIGHTS

 

132

THE ADJOURNMENT PROPOSAL

 

139

INFORMATION RELATED TO EDTECHX

 

140

EDTECHX’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

150

BUSINESS OF METEN

 

153

METEN’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

182

INDUSTRY OVERVIEW

 

217

REGULATIONS APPLICABLE TO METEN

 

222

BENEFICIAL OWNERSHIP OF SECURITIES

 

241

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

 

245

DESCRIPTION OF HOLDCO SECURITIES

 

249

DISSENTER’S RIGHTS

 

253

SHAREHOLDER PROPOSALS

 

253

OTHER STOCKHOLDER COMMUNICATIONS

 

253

EXPERTS

 

253

DELIVERY OF DOCUMENTS TO STOCKHOLDERS

 

253

WHERE YOU CAN FIND MORE INFORMATION

 

254

INDEX TO FINANCIAL STATEMENTS

 

F-1

ANNEXES:

ANNEX A — AGREEMENT AND PLAN OF REORGANIZATION

 

A-1

ANNEX B — HOLDCO’S AMENDED AND RESTATED MEMORANDUM AND ARTICLES OF ASSOCIATION

 

B-1

i

Frequently Used Terms

As used in this proxy statement/prospectus:

•        “Business Combination” or “business combination” means the transactions contemplated by the Merger Agreement and related agreements;

•        “China” or the “PRC” means the People’s Republic of China, excluding, for the purposes of this proxy statement/prospectus only, Taiwan and the special administrative regions of Hong Kong and Macau;

•        “Code” means the U.S. Internal Revenue Code of 1986, as amended;

•        “ELT” means English language training;

•        “gross billings” means the total amount of cash received for the sales of Meten’s products and services during a specific period of time, net of the total amount of refunds for that period, which is not a standard measure under U.S. GAAP;

•        “learning center” means the physical establishment of an education facility providing general adult ELT, junior ELT and international standardized test preparation under Meten’s overseas training services at a specific geographic location in the PRC, directly operated by VIEs and their respective subsidiaries or operated by franchise partners;

•        “offline ELT” means Meten’s offline services, which include general adult ELT, junior ELT and overseas training services;

•        “RMB” and “Renminbi” are the legal currency of China;

•        “student enrollments” or “student enrollment” mean the number of actual new sales contracts entered into between Meten and its students, excluding the number of refunded contracts and contracts with no revenue generated during a specified period of time;

•        “tier one cities” are Beijing, Shanghai, Guangzhou and Shenzhen;

•        “tier two cities” are provincial capitals, regional centers or economically developed cities in China, including, among others, Chengdu, Hangzhou, Chongqing, Wuhan and Tianjin;

•        “tier three cities” and “tier four cities” are small- to mid-sized cities in China that are strategically located or have relatively developed or large local economy;

•        “dollars,” “US$” and “U.S. dollars” are the legal currency of the United States;

•        “U.S. GAAP” means generally accepted accounting principles in the United States;

•        “variable interest entities” or “VIEs” means Shenzhen Meten International Education Co., Ltd. and Shenzhen Likeshuo Education Co., Ltd., which are PRC companies in which Meten does not have equity interests but whose financial results have been consolidated by Meten in accordance with U.S. GAAP due to Meten having effective control over, and being the primary beneficiary of, these companies; and “affiliated entities” refers to VIEs, the VIEs’ direct and indirect subsidiaries, and the VIEs’ affiliated entities that are registered as private non-enterprise institutions under the PRC laws;

•        “sponsors” means IBIS Capital Sponsor LLC and IBIS Capital Sponsor II LLC, each a Delaware limited liability company affiliated with Benjamin Vedrenne-Cloquet and Charles McIntyre.

The translations from RMB to U.S. dollars and from U.S. dollars to RMB in this proxy statement/prospectus were made at a rate of RMB7.1477 to US$1.00, the exchange rates set forth in the H.10 statistical release of the Federal Reserve Board on September 30, 2019. We make no representation that the RMB or U.S. dollar amounts referred to in this proxy statement/prospectus could have been or could be converted into U.S. dollars or RMB, as the case may be, at any particular rate or at all. On January 31, 2020, the noon buying rate as set forth in the H.10 statistical release of the Federal Reserve Board for RMB was RMB6.9161 to US$1.00.

ii

SUMMARY OF THE MATERIAL TERMS OF THE MERGERS

•        EdtechX Holdings Acquisition Corp., a Delaware corporation (“EdtechX”), Meten EdtechX Education Group Ltd., a Cayman Islands exempted company (“Holdco”), Meten Education Inc., a Delaware corporation and wholly owned subsidiary of Holdco (“EdtechX Merger Sub”), Meten Education Group Ltd., a Cayman Islands exempted company and wholly owned subsidiary of Holdco (“Meten Merger Sub”, and together with EdtechX Merger Sub, the “Merger Subs”), and Meten International Education Group, a Cayman Islands exempted company (the “Company” or “Meten”), are parties to an Agreement and Plan of Reorganization (as amended or supplemented from time to time, the “Merger Agreement”), dated as of December 12, 2019.

•        Meten, headquartered in Shenzhen, Guangdong Province, China, which is considered the Chinese Silicon Valley, is a market leader in English language training (“ELT”) in China, with a number one ranked position in the general adult ELT segment in terms of revenue in 2018, according to Frost & Sullivan. Meten focuses on providing industry leading English language and future skills training for a growing market of Chinese students and young professionals. Meten operates an omnichannel (retail and digital) business comprising a nationwide network of 149 learning centers (covering 36 cities in 18 provinces) under the brands Meten (adult and junior ELT services) and ABC (primarily junior ELT services), as well as the popular English language digital tutoring platform for students and young professionals, “Likeshuo”. Meten’s business plans include pursuing market consolidation in China and rolling out Meten’s existing omnichannel distribution platform, combining digital delivery and strategic retail presence, across a total addressable market of more than 600 cities in China. See the section of this proxy statement/prospectus titled “Business of Meten.”

•        Holdco was formed to serve as a holding company for Meten and EdtechX after consummation of the Mergers contemplated by the Merger Agreement. Each of the Merger Subs was formed solely as a vehicle for consummating the Mergers, and currently is a wholly owned subsidiary of Holdco. See the section of this proxy statement/prospectus titled “Summary of the Proxy Statement/Prospectus — The Parties.

•        Pursuant to the Merger Agreement, (i) Meten Merger Sub will merge with and into the Company, with the Company being the surviving entity of such merger (the “Meten Merger”) and becoming a wholly-owned subsidiary of Holdco (“Surviving Cayman Islands Company”) and (ii) EdtechX Merger Sub will merge with and into EdtechX, with EdtechX being the surviving entity of the merger (the “EdtechX Merger” and together with the Meten Merger, the “Mergers”) and becoming a wholly-owned subsidiary of Holdco (“Surviving Delaware Corporation”). See the section of this proxy statement/prospectus titled “The Merger Proposal — General — Structure of the Mergers.

•        Upon consummation of the Meten Merger, the shareholders of Meten will receive their pro rata portion of an aggregate of up to 48,391,607 Holdco Ordinary Shares. EdtechX will be required to pay cash to electing Meten shareholders, in an amount equal to 50% of the excess of the remaining cash at closing over $30 million (after taking into account conversions elected by EdtechX’s public stockholders and together with the proceeds arising from private placements) up to an aggregate of $10 million (“Cash Election”). Cash consideration paid will reduce the Holdco Ordinary Shares issuable to the Meten shareholders. See the section of this proxy statement/prospectus titled “The Merger Proposal — General — Consideration to Meten Shareholders”.

•        The shareholders of Meten who continue to hold Holdco Ordinary Shares through certain earnout measurement dates will also have the right to receive their pro rata portion of up to an additional 11,000,000 Holdco Ordinary Shares (“Contingent Shares”) as follows: (i) 4,000,000 Contingent Shares if the reported closing sale price of Holdco’s ordinary shares equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations or other similar actions) for any 20 consecutive trading days at any time before December 31, 2022, and (ii) 7,000,000 Contingent Shares if the reported closing sale price of the Holdco Ordinary Shares equals or exceeds $15.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations or other similar actions) for any 20 consecutive trading days during the fiscal year ending December 31, 2023. The earnout conditions operate independently. There is no “catch up” mechanism; Contingent Shares not earned in a prior earnout period will not be earnable in a subsequent period. See the section of this proxy statement/prospectus titled “The Merger Proposal — General — Consideration to Meten Shareholders”.

1

•        If the EdtechX Stockholders approve the merger proposal, immediately prior to the consummation of the Business Combination, all outstanding units of EdtechX (each of which consists of one share of common stock of EdtechX and one redeemable warrant of EdtechX) will separate into their individual components of shares of common stock of EdtechX and warrants of EdtechX, and such unit will cease separate existence and trading. Upon consummation of the EdtechX Merger, (i) each share of EdtechX common stock outstanding on the closing date will be exchanged for the right to receive one Holdco Ordinary Share, except that holders of shares of EdtechX common stock sold in EdtechX’s initial public offering will be entitled to elect instead to receive a pro rata portion of EdtechX’s trust account, as provided in EdtechX’s charter documents, (ii) each outstanding warrant of EdtechX will entitle the holder to purchase one Holdco Ordinary Share at a price of $11.50 per share, and (iii) each outstanding unit purchase option will remain outstanding but will be deemed to have been converted to represent the right to purchase one Holdco Unit. See the section of this proxy statement/prospectus titled “The Merger Proposal — General — Consideration to EdtechX Stockholders”.

•        Immediately following the consummation of the Mergers, without giving effect to any conversions of EdtechX public shares and cash payments to Meten shareholders in lieu of Holdco Ordinary Shares, we estimate that the EdtechX stockholders will hold approximately 14% of the issued and outstanding Holdco Ordinary Shares (assuming no conversions of EdtechX public shares, no Cash Election is made, and without taking into effect securities which may be issued pursuant to the Azimut Investment or in a Financing) and the shareholders of Meten will hold approximately 86% of the issued and outstanding Holdco Ordinary Shares (assuming no conversions of EdtechX public shares, no Cash Election is made, and without taking into effect securities which may be issued pursuant to the Azimut Investment or in a Financing). All of the Holdco Ordinary Shares to be issued and outstanding at the completion of the Mergers will be of a single class with equal rights with each Holdco Ordinary Share having one vote per share.

•        Certain of the Meten shareholders will enter into lock-up agreements with Holdco (“Lock-up Agreements”) pursuant to which they will agree not to transfer the Holdco Ordinary Shares received as consideration in the Meten Merger (including any Contingent Shares, if and when issued), until, with respect to 50% of such Holdco Ordinary Shares, the earlier of the date that is six months after the closing of the Mergers and the date on which the closing price of the Holdco Ordinary Shares equals or exceeds $12.50 per share (as adjusted for share splits, share capitalizations, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period after closing, and with respect to the remaining 50% of such Holdco Ordinary Shares, one year after the closing of the Mergers, subject in each case to earlier release of the shares if certain conditions are met. All other Meten shareholders will agree not to transfer the Holdco Ordinary Shares received by them as consideration in the Meten Merger (including any Contingent Shares, if and when issued) until the date that is at least three months after the closing. See the section of this proxy statement/prospectus titled “The Merger Proposal — Related Agreements or Arrangements — Restrictions on Transfer”.

•        Certain shareholders of EdtechX, including affiliates of Benjamin Vedrenne-Cloquet and Charles McIntyre, will enter into an amended stock escrow agreement (“Amended Stock Escrow Agreement”) and a lock-up agreement pursuant to which the Holdco Ordinary Shares and Holdco Warrants to be issued to them will remain subject to the escrow and/or transfer restrictions as set forth in the existing stock escrow agreement entered into by such persons in connection with EdtechX’s initial public offering, i.e. they will agree not to transfer the related Holdco Ordinary Shares and Holdco Warrants received as consideration in the Meten Merger, until, with respect to 50% of such Holdco Ordinary Shares and Holdco Warrants, the earlier of the date that is six months after the closing of the Mergers and the date on which the closing price of the Holdco Ordinary Shares equals or exceeds $12.50 per share (as adjusted for share splits, share capitalizations, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period after closing, and with respect to the remaining 50% of such Holdco Ordinary Shares and Holdco Warrants, six months after the closing of the Mergers, subject in each case to earlier release of the shares if certain conditions are met. See the section of this proxy statement/prospectus titled “The Merger Proposal — Related Agreements or Arrangements — Restrictions on Transfer”.

•        At the closing of the Mergers, Holdco will enter into a Registration Rights Agreement providing the shareholders of Meten with certain demand registration rights and piggy-back registration rights with respect to registration statements filed by Holdco after the closing. Additionally, EdtechX and Holdco will amend any existing registration rights agreements to which it is a party or similar agreements or instruments to which it is a party providing for registration rights with respect to EdtechX’s securities held by any person such that, after giving effect to the Mergers, the Holdco securities held by former EdtechX securityholders

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will have the same registration rights as they currently have. See the section of this proxy statement/prospectus titled “The Merger Proposal — Related Agreements or Arrangements — Registration Rights”.

•        In connection with EdtechX’s initial public offering, Azimut Enterprises Holdings S.r.l. (the “Azimut Investor”) entered into a contingent forward purchase agreement (the “Forward Purchase Contract”) with EdtechX to purchase, in a private placement to occur concurrently with the consummation of the Mergers, up to 2,000,000 units at $10.00 per unit (or up to an aggregate purchase price of $20,000,000), on substantially the same terms as the sale of units in EdtechX’s initial public offering. In connection with the execution of the Merger Agreement, the Azimut Investor irrevocably consented to purchase up to 2,000,000 units for $20,000,000 at the closing of the transactions contemplated by the Merger Agreement (the “Azimut Investment”). On February 26, 2020, EdtechX and Holdco jointly notified the Azimut Investor that it would be required to purchase 2,000,000 units of EdtechX, for an aggregate investment of $20,000,000, upon the closing of the business combination, representing the full amount of the Azimut Investor’s investment under the Forward Purchase Contract. See the section of this proxy statement/prospectus titled “The Merger Proposal — Related Agreements or Arrangements — Forward Purchase Contract”.

•        EdtechX and Meten agreed to use their commercially reasonable efforts to arrange and obtain financing in the range of $20,000,000 and $100,000,000 (which does not include the Azimut Investment) from the sale of equity securities of Holdco (a “Financing”). On February 28, 2020, Holdco entered into a forward purchase contract with an unaffiliated investor (a “PIPE investor”) pursuant to which such PIPE investor agreed to purchase, in a private placement to occur concurrently with the consummation of the Business Combination, an aggregate of 600,000 Holdco Shares at $10.00 per share, for an aggregate investment of $6 million. See the section of this proxy statement/prospectus titled “The Merger Proposal — Related Agreements or Arrangements — Financing Cooperation”.

•        At closing of the Mergers, EdtechX, Holdco, Meten and certain shareholders of Meten and stockholders of EdtechX will enter into a voting agreement (“Voting Agreement”) pursuant to which they will agree to nominate nine members to the board of directors of Holdco, including Benjamin Vedrenne-Cloquet and Charles McIntyre, EdtechX’s Chief Executive Officer and Chairman of the Board, respectively, and Jishuang Zhao, Siguang Peng and Yupeng Guo, the founders of Meten, and Yongchao Chen, and to take all actions necessary to vote all Holdco ordinary shares beneficially owned by them for the election of such persons until the third anniversary of the closing. Relatedly, the Merger Agreement provides that Messrs. Vedrenne-Cloquet and McIntyre will each be paid the following compensation annually for their board service through 2023: (i) $120,000 in cash, and (ii) 20,000 Holdco Ordinary Shares. The first year’s installment of the foregoing board of director fees will be paid to Messrs. Vedrenne-Cloquet and McIntyre upon closing of the Mergers. The following years’ board fees will be paid on the anniversary of the closing date. See the section of this proxy statement/prospectus titled “The Merger Proposal — Related Agreements or Arrangements — Voting Agreement”.

•        The Agreement provides for mutual indemnification by EdtechX and Meten for breaches of their respective representations, warranties, and covenants. Claims for indemnification are subject to a de minimis per-claim threshold, an aggregate threshold, and a cap. See the section of this proxy statement/prospectus titled “Summary of the Proxy Statement/Prospectus — The Merger Proposal”.

•        In addition to voting on a proposal to adopt the Merger Agreement and approve the Mergers contemplated thereby as described in this proxy statement/prospectus (the “merger proposal”), the stockholders of EdtechX will also vote on proposals to elect nine (9) directors to the board of directors of Holdco (the “director proposal”), approve various material differences between EdtechX’s amended and restated certificate of incorporation and Holdco’s agreement and memorandum of association to be effective upon the consummation of the business combination (the “charter proposals”), and, if necessary, an adjournment of the annual meeting if EdtechX is unable to consummate the Mergers for any reason (the “adjournment proposal”). See the sections of this proxy statement/prospectus titled “The Director Proposal,” “The Charter Proposals,” and “The Adjournment Proposal.”

•        Upon completion of the Mergers, assuming election by the stockholders of EdtechX, the directors of Holdco will be Benjamin Vedrenne-Cloquet and Charles McIntyre, EdtechX’s Chief Executive Officer and Chairman of the Board, respectively, Jishuang Zhao, Siguang Peng and Yupeng Guo, the founders of Meten, Yongchao Chen, Yanli Chen, Zhiyi Xie, and Ying Chen. The executive officers of Holdco will be Mr. Siguang Peng as the chief executive officer and Mr. Ng Kwok Yin as the chief financial officer. See the section of this proxy statement/prospectus titled “The Director Proposal.”

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

Q.    Why am I receiving this proxy statement/prospectus?

 

A.    EdtechX and Meten have agreed to a business combination under the terms of the Merger Agreement that is described in this proxy statement/prospectus. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A, and EdtechX encourages its stockholders to read it in its entirety. EdtechX’s stockholders are being asked to consider and vote upon a proposal to adopt the Merger Agreement, which, among other things, provides for (i) the Meten Merger, whereby Meten Merger Sub will merge with and into Meten, with Meten being the surviving entity of such merger and (ii) the EdtechX Merger, whereby EdtechX Merger Sub will merge with and into EdtechX, with EdtechX being the surviving entity of such merger. Immediately after the Mergers, each of EdtechX and Meten will be wholly-owned subsidiaries of Holdco.

   

In addition to voting on the Mergers, the stockholders of EdtechX will also consider and vote on the following matters:

   

•   a proposal to elect nine (9) directors to the board of directors of Holdco to serve until their successors are duly elected and qualified. See the section of this proxy statement/prospectus titled “The Director Proposal.

•   to approve the following material differences between EdtechX’s amended and restated certificate of incorporation and Holdco’s agreement and memorandum of association to be effective upon the consummation of the business combination: (i) the name of the new public entity will be “Meten EdtechX Education Group Ltd.” as opposed to “EdtechX Holdings Acquisition Corp.”; (ii) Holdco has 500,000,000 ordinary shares authorized, as opposed to EdtechX having 25,000,000 authorized shares of common stock and 1,000,000 authorized shares of preferred stock; (iii) Holdco’s corporate existence is perpetual as opposed to EdtechX’s corporate existence terminating if a business combination is not consummated by EdtechX within a specified period of time; and (iv) Holdco’s constitutional documents do not include the various provisions applicable only to special purpose acquisition corporations that EdtechX’s charter contains. See the section of this proxy statement/prospectus titled “The Charter Proposals.

•   to consider and vote upon a proposal to adjourn the annual meeting to a later date or dates, if necessary, if EdtechX is not able to consummate the Mergers contemplated by the Merger Agreement for any reason. See the section of this proxy statement/prospectus titled “The Adjournment Proposal.

   

EdtechX will hold the annual meeting of its stockholders to consider and vote upon these proposals. This proxy statement/prospectus contains important information about the proposed Mergers and the other matters to be acted upon at the annual meeting. Stockholders should read it carefully.

   

The vote of stockholders is important. Stockholders are encouraged to vote as soon as possible after carefully reviewing this proxy statement/prospectus.

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Q.    Why is EdtechX proposing the business combination?

 

A.    EdtechX was organized to effect a merger, capital stock exchange, asset acquisition or other similar business combination with one or more businesses or entities.

EdtechX completed its initial public offering of 5,500,000 units, with each unit consisting of one share of common stock and one warrant to purchase one share of common stock at a price of $11.50 per share upon the completion of its initial business combination, on October 10, 2018. On October 17, 2018, EdtechX consummated the closing of an additional 825,000 Units sold pursuant to the underwriters’ over-allotment option. Simultaneously with the closing of the initial public offering and the over-allotment option, EdtechX consummated the private placement of an aggregate of 3,780,000 warrants. Approximately $64.2 million of the net proceeds of the sale of the units in the initial public offering, over-allotment and the sale of the warrants in the private placement, was placed in a trust account for the benefit of the purchasers of the units in EdtechX’s initial public offering. Since the completion of the initial public offering, EdtechX’s activity has been limited to the evaluation of business combination candidates.

Meten, headquartered in Shenzhen, Guangdong Province, China, which is considered the Chinese Silicon Valley, is a market leader in ELT in China, with a number one ranked position in the general adult ELT segment in terms of revenue in 2018, according to Frost & Sullivan. Meten focuses on providing industry leading English language and future skills training for a growing market of Chinese students and young professionals. Meten operates an omnichannel (retail and digital) business comprising a nationwide network of 149 learning centers (covering 36 cities in 18 provinces) under the brands Meten (adult and junior ELT services) and ABC (primarily junior ELT services), as well as the popular English language digital tutoring platform for students and young professionals, “Likeshuo”. Meten’s business plans include pursuing market consolidation in China and rolling out Meten’s existing omnichannel distribution platform, combining digital delivery and strategic retail presence, across a total addressable market of more than 600 cities in China.

Based on its due diligence investigations of Meten, including the financial and other information provided by Meten in the course of their negotiations, EdtechX believes that a business combination with Meten will provide several significant benefits to both EdtechX and Meten. However, there is no assurance of this. See the section entitled “The Merger Proposal — EdtechX’s Board of Directors’ Reasons for Approval of the Mergers.”

Q.    I am an EdtechX warrant holder. Why am I receiving this proxy statement/prospectus?

 

A.    As a holder of EdtechX warrants, upon consummation of the Mergers, you will be entitled to purchase one Holdco Ordinary Share in lieu of one share of common stock of EdtechX at a purchase price of $11.50. This proxy statement/prospectus includes important information about Holdco and the business of Holdco and its subsidiaries following consummation of the Mergers. Since holders of EdtechX warrants may become holders of Holdco Ordinary Shares after the consummation of the business combination, we urge you to read the information contained in this proxy statement/prospectus carefully.

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Q.    I am an EdtechX stockholder. Do I have conversion rights?

 

A.    If you are a holder of public shares, you have the right to demand that EdtechX convert such shares into cash notwithstanding whether you vote for or against the merger proposal or whether you are a stockholder of record on the record date. We sometimes refer to these rights to demand conversion of the public shares into a pro rata portion of the cash held in EdtechX’s trust account as “conversion rights.”

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, or the “Exchange Act”) will be restricted from seeking conversion rights with respect to 20% or more of the public shares. Accordingly, all public shares in excess of 20% held by a public shareholder, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” will not be converted to cash.

Under EdtechX’s amended and restated certificate of incorporation, the Mergers may only be consummated if, upon consummation of the Mergers, EdtechX has at least $5,000,001 of net tangible assets.

Q.    How do I exercise my conversion rights as an EdtechX shareholder?

 

A.    If you are a holder of public shares and wish to exercise your conversion rights, you must demand that EdtechX convert your shares to cash no later than two business days prior to the close of the vote on the merger proposal and deliver your shares to EdtechX’s transfer agent physically or electronically using Depository Trust Company’s DWAC (Deposit Withdrawal at Custodian) System prior to the vote at the meeting. Any holder of public shares will be entitled to demand that his shares be converted for a full pro rata portion of the amount then in the trust account (which was approximately $65.4 million, or approximately $10.34 per share, as of February 24, 2020, the record date), regardless of whether such holder votes in connection with the merger proposal or is a holder of record on the record date. Such amount, less any owed but unpaid taxes on the funds in the trust account, will be paid promptly after consummation of the Mergers. Your vote on any proposal other than the merger proposal will have no impact on the amount you will receive upon exercise of your conversion rights.

Any request for conversion, once made by a holder of public shares, may be withdrawn at any time up to the time the vote is taken with respect to the merger proposal at the annual meeting. If you deliver your shares for conversion to EdtechX’s transfer agent and later decide prior to the annual meeting not to elect conversion, you may request that EdtechX’s transfer agent return the shares (physically or electronically). You may make such request by contacting EdtechX’s transfer agent at the address listed at the end of this section.

If a holder of public shares properly demands conversion as described above, then, if the Mergers are consummated, EdtechX will convert these shares into a pro rata portion of funds deposited in the trust account. If you exercise your conversion rights, then you will be exchanging your shares of common stock of EdtechX for cash and will not be entitled to Holdco Ordinary Shares upon consummation of the Mergers.

If you are a holder of public shares and you exercise your conversion rights, it will not result in the loss of any EdtechX warrants that you may hold. Your warrants will become exercisable to purchase one Holdco Ordinary Share in lieu of one share of common stock of EdtechX for a purchase price of $11.50 per Holdco Ordinary Share upon consummation of the Mergers.

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Q.    What happens to the funds deposited in the trust account after consummation of the Mergers?

 

A.    After consummation of the Mergers, the funds then held in the trust account will be released and used to pay holders of the public shares who exercise conversion rights, to pay the cash merger consideration if the Cash Election is made, to pay fees and expenses incurred in connection with the business combination (including fees of an aggregate of approximately $1.225 million to various investment bankers in connection with the business combination and to the underwriters from EdtechX’s initial public offering for deferred underwriting commissions), and for working capital and general corporate purposes.

Q.    What happens if a substantial number of public shareholders vote in favor of the merger proposal and exercise their conversion rights?

 

A.    EdtechX’s public shareholders may vote in favor of the business combination and still exercise their conversion rights. Accordingly, the business combination may be consummated even though the funds available from the trust account and the number of public shareholders are substantially reduced as a result of conversions by public shareholders. However, with fewer public shares and public shareholders, the trading market for the Holdco Ordinary Shares may be less liquid than the market for EdtechX’s shares of common stock were prior to the Mergers and Holdco may not be able to meet the listing standards for Nasdaq, or another national securities exchange. In addition, with fewer funds available from the trust account, the working capital infusion from the trust account into Meten’s business will be reduced.

Further, one of the conditions to Meten’s obligation to consummate the Mergers is that EdtechX have at least $30 million in the trust account after taking into account conversions by public shareholders and the proceeds from the Azimut Investment and the Financing (subject to adjustment to $20 million in the event that the parties elect to raise less than $10 million in the Financing), which we refer to as the “Minimum Cash Closing Condition”. Accordingly, conversions by public shareholders may prevent EdtechX from meeting the Minimum Cash Closing Condition, or may cause EdtechX to seek additional financing from the Azimut Investors or other third parties.

Q.    What happens if the Mergers are not consummated?

 

A.    If EdtechX does not complete the Mergers with Meten or consummate another business combination by April 10, 2020 (or such later date as EdtechX shareholders may approve), it will trigger EdtechX’s automatic winding up, dissolution and liquidation pursuant to the terms of its amended and restated certificate of incorporation. There is no limit on the number of extensions of time to complete a business combination that EdtechX may take (although Meten would have the right to terminate the merger agreement if the Mergers are not consummated on or before April 1, 2020).

Q.    Do I have dissenter’s rights if I object to the proposed Mergers?

 

A.    No. EdtechX stockholders do not have dissenter’s rights under Delaware law in connection with the Mergers.

Q.    When do you expect the Mergers to be completed?

 

A.    It is currently anticipated that the Mergers will be consummated promptly following the completion of the EdtechX annual meeting, which is scheduled for March 26, 2020, and any postponements or adjournments thereof. For a description of the conditions for the completion of the Mergers, see the section entitled “The Merger Agreement — Conditions to Closing.”

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Q.    What do I need to do now?

 

A.    EdtechX urges you to read carefully and consider the information contained in this proxy statement/prospectus, including the annexes, and to consider how the Mergers will affect you as a stockholder of EdtechX. Stockholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy cards.

Q.    How do I vote?

 

A.    If you are a holder of record of EdtechX common stock on the record date, you may vote in person at the annual meeting or by submitting a proxy for the annual meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the meeting and vote in person, obtain a proxy from your broker, bank or nominee.

Q.    If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

 

A.    No. Under applicable self-regulatory organization rules, your broker may not exercise discretionary authority to vote your shares of EdtechX common stock on “non-routine” proposals, such as the merger proposal. Accordingly, your broker, bank or nominee cannot vote your shares unless you provide it with instructions on how to vote. If you do not provide instructions on how to vote on a “non-routine” matter, the bank, broker or other nominee will inform us that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker non-vote.”

Q.    May I change my vote after I have mailed my signed proxy card or given instructions to my broker, bank or other nominee?

 

A.    Yes. Stockholders of record may send a later-dated, signed proxy card to EdtechX’s secretary at the address set forth below so that it is received prior to the vote at the annual meeting or attend the annual meeting in person and vote. Stockholders of record also may revoke their proxy by sending a notice of revocation to EdtechX’s secretary, which must be received by EdtechX’s secretary prior to the vote at the annual meeting. Stockholders who hold their shares in “street name” must follow the instructions provided by their broker, bank or other nominee in order to change or revoke their voting instructions.

Q.    What happens if I fail to take any action with respect to the meeting?

 

A.    If you are a stockholder and you fail to take any action with respect to the stockholder meeting and the Mergers are approved by stockholders and consummated, you will become a shareholder of Holdco. If you fail to take any action with respect to the stockholder meeting and the Mergers are not approved, you will continue to be a stockholder of EdtechX.

Q.    What should I do with my share and warrant certificates?

 

A.    EdtechX stockholders should not submit their certificates now. After the consummation of the Mergers, Holdco will send instructions to EdtechX stockholders and warrant holders regarding the exchange of their securities for Holdco securities.

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Q.    What should I do if I receive more than one set of voting materials?

 

A.    You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus. For example, if you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. If you hold your shares in more than one brokerage account, you will receive voting materials for each brokerage account in which you hold shares. Please complete, sign, date and return each proxy card you receive and provide instructions on how to vote your shares with respect to each brokerage account for which you receive proxy materials, in order to be sure you cast a vote with respect to all of your shares of EdtechX common stock.

Q.    Who can help answer my questions?

 

A.    If you have questions about the Mergers or if you need additional copies of the proxy statement/prospectus or the enclosed proxy card you should contact:

   

EdtechX Holdings Acquisition Corp.
c/o IBIS Capital Limited
22 Soho Square
London, W1D 4NS
United Kingdom
Attn: Secretary
Tel: +44 207 070 7080

or:

Advantage Proxy, Inc.
P.O. Box 13581
Des Moines, WA 98198
Toll Free Telephone: (877) 870-8565
Main Telephone: (206) 870-8565
E-mail: ksmith@advantageproxy.com

   

You may also obtain additional information about EdtechX from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.”

If you are a holder of public shares and you intend to seek conversion of your shares, you will need to deliver your shares (either physically or electronically) to EdtechX’s transfer agent at the address below at least two business days prior to the vote at the annual meeting. If you have questions regarding the certification of your position or delivery of your stock, please contact:

Mr. Mark Zimkind
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
E-mail: mzimkind@continentalstock.com

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that may be important to you. To better understand the proposals to be submitted for a vote at the annual meeting, including the Mergers, you should read this entire document carefully, including the Merger Agreement attached as Annex A to this proxy statement/prospectus. The Merger Agreement is the legal document that governs the Mergers that will be undertaken. It is also described in detail in this proxy statement/prospectus in the section entitled “The Merger Agreement.”

The Parties

EdtechX

EdtechX is a blank check company incorporated in Delaware on May 15, 2018 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities.

On October 10, 2018, EdtechX consummated the initial public offering of 5,500,000 units and on October 17, 2018, EdtechX consummated the closing of an additional 825,000 units sold pursuant to the underwriters’ over-allotment option. Each unit consists of one share of common stock and one redeemable warrant. Each warrant entitles the holder to purchase one share of common stock at a price of $11.50 per share, subject to adjustment, upon consummation of EdtechX’s initial business combination. The units from the initial public offering were sold at an offering price of $10.00 per unit, generating total gross proceeds of $63,250,000. Simultaneously with the closing of the initial public offering and the over-allotment option, EdtechX consummated the private placement of an aggregate of 3,780,000 warrants at a price of $1.00 per warrant, generating gross proceeds of $3.78 million. Approximately $64.2 million ($10.15 per public share) of the net proceeds of the sale of the units in the initial public offering and over-allotment and the sale of the private warrants, is held in a trust account for the benefit of the public shareholders.

EdtechX’s units, common stock and warrants are listed on Nasdaq under the symbols EDTXU, EDTX and EDTXW, respectively.

EdtechX’s principal executive office is located at 22 Soho Square, London W1D 4NS, United Kingdom and its telephone number is +44 207 070 7080. After the consummation of the Mergers, EdtechX will become a wholly owned subsidiary of Holdco.

Meten

Meten, headquartered in Shenzhen, Guangdong Province, China, which is considered the Chinese Silicon Valley, is a market leader in ELT in China, with a number one ranked position in the general adult ELT segment in terms of revenue in 2018, according to Frost & Sullivan. Meten focuses on providing industry leading English language and future skills training for a growing market of Chinese students and young professionals. Meten operates an omnichannel (retail and digital) business comprising a nationwide network of 149 learning centers (covering 36 cities in 18 provinces) under the brands Meten (adult and junior ELT services) and ABC (primarily junior ELT services), as well as the popular English language digital tutoring platform for students and young professionals, “Likeshuo”. Meten’s business plans include pursuing market consolidation in China and rolling out Meten’s existing omnichannel distribution platform, combining digital delivery and strategic retail presence, across a total addressable market of more than 600 cities in China.

Meten, a Cayman Islands exempted company, was formed in July 10, 2018. Meten’s principal executive office is located at 3rd Floor, Tower A, Tagen Knowledge & Innovation Center, 2nd Shenyun West Road, Nanshan District, Shenzhen, Guangdong Province 518045, The People’s Republic of China. Meten’s telephone number is +86 755 8294 5250. After the consummation of the Mergers, Meten will become a wholly owned subsidiary of Holdco.

Holdco

Holdco was formed to serve as a holding company for Meten and EdtechX after consummation of the Mergers.

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Holdco, a Cayman Islands exempted company, was formed on September 27, 2019. Holdco’s principal executive office is located at 3rd Floor, Tower A, Tagen Knowledge & Innovation Center, 2nd Shenyun West Road, Nanshan District, Shenzhen, Guangdong Province 518045, The People’s Republic of China. Holdco’s telephone number is +86 755 8294 5250. After the consummation of the Mergers, Holdco will become the continuing public company.

Meten Merger Sub

Meten Merger Sub was formed solely as a vehicle for consummating the Meten Merger, and currently is a wholly owned subsidiary of Holdco.

Meten Merger Sub, a Cayman Islands exempted company, was formed on October 15, 2019. Meten Merger Sub’s principal executive office is located at 3rd Floor, Tower A, Tagen Knowledge & Innovation Center, 2nd Shenyun West Road, Nanshan District, Shenzhen, Guangdong Province 518045, The People’s Republic of China. Meten Merger Sub’s telephone number is +86 755 8294 5250. After the consummation of the Mergers, it will cease to exist.

EdtechX Merger Sub

EdtechX Merger Sub was formed solely as a vehicle for consummating the EdtechX Merger, and currently is a wholly owned subsidiary of Holdco.

EdtechX Merger Sub, a Delaware corporation, was formed on November 26, 2019. EdtechX Merger Sub’s principal executive office is located at 3rd Floor, Tower A, Tagen Knowledge & Innovation Center, 2nd Shenyun West Road, Nanshan District, Shenzhen, Guangdong Province 518045, The People’s Republic of China. EdtechX Merger Sub’s telephone number is +86 755 8294 5250. After the consummation of the Mergers, it will cease to exist.

Emerging Growth Company

Each of EdtechX and Holdco is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (or JOBS Act). As an emerging growth company, each of EdtechX and Holdco is eligible, and has elected, to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. These include, but are not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and reduced disclosure obligations regarding executive compensation (to the extent applicable to a foreign private issuer in Holdco’s case).

Holdco could remain an emerging growth company until the last day of Holdco’s fiscal year following the fifth anniversary of the consummation of the Mergers. However, if Holdco’s annual gross revenue is $1.07 billion or more, if its non-convertible debt issued within a three year period exceeds $1 billion or the market value of its ordinary shares that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, Holdco would cease to be an emerging growth company as of the following fiscal year.

Foreign Private Issuer

Holdco will be a “foreign private issuer” as defined under the Exchange Act. As a foreign private issuer under the Exchange Act, Holdco will be exempt from certain rules under the Exchange Act, including the proxy rules, which impose certain disclosure and procedural requirements for proxy solicitations. Moreover, Holdco will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as domestic U.S. companies with securities registered under the Exchange Act, and Holdco will not be required to comply with Regulation FD, which imposes certain restrictions on the selective disclosure of material information. In addition, Holdco’s officers, directors and principal shareholders will be exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of Holdco Ordinary Shares.

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As a foreign private issuer, Holdco will also be permitted, and intends, to follow certain home country corporate governance practices instead of those otherwise required under the applicable rules of Nasdaq for domestic U.S. issuers. In order to rely on this exception, we are required to disclose Nasdaq rule that we do not intend to follow and describe the home country practice that we will follow in lieu thereof. Accordingly, Holdco intends to follow Cayman Islands corporate governance practices in lieu of the following Nasdaq corporate governance rules:

(a)     a majority of directors being independent — Cayman Islands law and generally accepted business practices in the Cayman Islands do not require that a majority of Holdco’s board of directors be independent and, accordingly, Holdco will claim the exemption for foreign private issuers with respect to the Nasdaq requirement to have a majority of independent directors;

(b)     a nominating and corporate governance committee composed entirely of independent directors — Cayman Islands law and generally accepted business practices in the Cayman Islands do not require that Holdco’s nominating and corporate governance committee be composed entirely of independent directors and, accordingly, Holdco will claim the exemption for foreign private issuers with respect to the Nasdaq requirement with respect to the composition of the nominating and corporate governance committee;

(c)     a compensation committee composed entirely of independent directors — Cayman Islands law and generally accepted business practices in the Cayman Islands do not require that Holdco’s compensation committee be composed entirely of independent directors and, accordingly, Holdco will claim the exemption for foreign private issuers with respect to the Nasdaq requirement with respect to the composition of the compensation committee;

(d)    we will not provide an annual certification by our chief executive officer that he or she is not aware of any non-compliance with any corporate governance rules of the Nasdaq, as such certification is not required under Cayman Islands law;

(e)     have regularly scheduled executive sessions with only non-management directors — Cayman Islands law and generally accepted business practices in the Cayman Islands do not require that Holdco’s board of directors hold regularly scheduled executive sessions with only non-management directors and, accordingly, Holdco will claim the exemption for foreign private issuers with respect to the Nasdaq requirement with respect to executive sessions; or

(f)     shareholder approval — Cayman Islands law and generally accepted business practices in the Cayman Islands do not require Holdco to seek shareholder approval for (i) the establishment, implementation and material revisions of the terms of share incentive plans, (ii) the issuance of more than 1% of our outstanding ordinary shares or more than 1% of our outstanding voting power to a related party, (iii) the issuance of more than 20% of our outstanding ordinary shares or voting power, (iv) an issuance in connection with an acquisition, and (iv) an issuance that would result in a change of control. Accordingly, Holdco will claim the exemption for foreign private issuers with respect to the Nasdaq shareholder approval requirements.

The Merger Proposal

The Merger Agreement provides for (i) the Meten Merger, pursuant to which all of the shareholders of Meten will exchange all the outstanding Meten share capital for Holdco Ordinary Shares, and (ii) immediately thereafter, the EdtechX Merger, pursuant to which (x) each share of EdtechX common stock outstanding on the closing date will be exchanged for one Holdco Ordinary Share, except that holders of public shares will be entitled to elect instead to receive a pro rata portion of EdtechX’s trust account, as provided in EdtechX’s charter documents, (y) each outstanding warrant of EdtechX will entitle the holder to purchase one Holdco Ordinary Share at a price of $11.50 per share, and (z) each outstanding unit purchase option will remain outstanding but will be deemed to have been converted to the right to purchase one Holdco Unit.

As a result of the Mergers, Meten and EdtechX will become wholly owned subsidiaries of Holdco and the securityholders of Meten and EdtechX will become the securityholders of Holdco. We estimate that, immediately following the consummation of the Mergers, without giving effect to any conversions of EdtechX public shares and cash payments to Meten shareholders in lieu of Holdco Ordinary Shares, the shares issued to the shareholders of Meten will constitute approximately 86% of the issued and outstanding Holdco Ordinary Shares (assuming no conversions of EdtechX public shares, no Cash Election is made, and without taking into effect securities which may be issued pursuant to the Azimut Investment or in a Financing) and the shares issued to the EdtechX stockholders

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will constitute approximately 14% of the issued and outstanding Holdco Ordinary Shares (assuming no conversions of EdtechX public shares, no Cash Election is made, and without taking into effect securities which may be issued pursuant to the Azimut Investment or in a Financing). All of the Holdco Ordinary Shares to be issued and outstanding at the completion of the Mergers will be of a single class with equal rights with each Holdco Ordinary Share having one vote per share.

The shareholders of Meten who continue to hold Holdco Ordinary Shares through certain earnout measurement dates will also have the right to receive their pro rata portion of up to an additional 11,000,000 Contingent Shares as follows: (i) 4,000,000 Contingent Shares if the reported closing sale price of the Holdco Ordinary Shares equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations or other similar actions) for any 20 consecutive trading days at any time before December 31, 2022, and (ii) 7,000,000 Contingent Shares if the reported closing sale price of the Holdco Ordinary Shares equals or exceeds $15.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations or other similar actions) for any 20 consecutive trading days during the fiscal year ending December 31, 2023. The earnout conditions operate independently. There is no “catch up” mechanism; Contingent Shares not earned in a prior earnout period will not be earnable in a subsequent period.

Certain of the Meten shareholders will enter into Lock-up Agreements pursuant to which they will agree not to transfer the Holdco Ordinary Shares received as consideration in the Meten Merger (including any Contingent Shares, if and when issued), until (i) with respect to 50% of such Holdco ordinary shares, the earlier of the date that is six months after the closing of the Mergers and the date on which the closing price of the Holdco Ordinary Shares equals or exceeds $12.50 per share (as adjusted for share splits, share capitalizations, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period after closing and (ii) with respect to the remaining 50% of such Holdco ordinary shares, one year after closing of the Mergers, or earlier, in either case, if, subsequent to the closing, Holdco consummates a liquidation, merger, stock exchange or other similar transaction which results in all holders of Holdco Ordinary Shares ceasing to hold more than fifty percent (50%) of the then outstanding Holdco Ordinary Shares or having the right to exchange their Holdco Ordinary Shares for cash or freely tradable securities.

All other Meten shareholders will agree not to transfer the Holdco Ordinary Shares received by them as consideration in the Meten Merger (including any Contingent Shares, if and when issued) until the date that is at least three months after the closing.

Certain shareholders of EdtechX, including affiliates of Benjamin Vedrenne-Cloquet and Charles McIntyre, will enter into an Amended Stock Escrow Agreement and a lock-up agreement pursuant to which the Holdco Ordinary Shares and Holdco Warrants to be issued to them will remain subject to the escrow and/or transfer restrictions as set forth in the existing stock escrow agreement entered into by such persons in connection with EdtechX’s initial public offering, i.e. they will agree not to transfer the related Holdco Ordinary Shares and Holdco Warrants received as consideration in the Meten Merger, until, with respect to 50% of such Holdco Ordinary Shares and Holdco Warrants, the earlier of the date that is six months after the closing of the Mergers and the date on which the closing price of the Holdco Ordinary Shares equals or exceeds $12.50 per share (as adjusted for share splits, share capitalizations, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period after closing, and with respect to the remaining 50% of such Holdco Ordinary Shares and Holdco Warrants, six months after the closing of the Mergers, subject in each case to earlier release of the shares if certain conditions are met.

The Agreement provides for mutual indemnification by EdtechX and Meten for breaches of their respective representations, warranties, and covenants. Claims for indemnification must be brought after the consummation of the Mergers and before the date that is one year after the consummation of the Mergers. Claims for indemnification may be asserted once damages exceed a $5 million threshold, and will be reimbursable to the extent such damages exceed the threshold. Claims for damages below a de minimis threshold of $200,000 will not count toward satisfying the $5 million deductible. The indemnification obligation of Meten will be capped at 3.5% of the aggregate Holdco Ordinary Shares issuable to the Meten shareholders in the transactions and the indemnification obligation of EdtechX will be capped at an aggregate of 1,693,706 Holdco Shares. The Merger Agreement does not provide for an escrow of shares which may be payable to EdtechX for indemnification, but requires that Meten shareholders either forfeit and return to Holdco for cancellation the number of Holdco Ordinary Shares equal to their pro rata portion of the indemnifiable damages or, if the shareholder has sold the Holdco Ordinary Shares, to pay cash in value of the related shares in an amount equal to their pro rata portion of the indemnifiable damages. Holdco will be required to reserve for issuance additional Holdco ordinary shares sufficient to cover indemnification of the

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Meten shareholders. The foregoing indemnification will provide the sole means of recovering damages arising from breaches of representations, warranties, or covenants.

As described in the final prospectus for EdtechX’s initial public offering, the Azimut Investor entered into a Forward Purchase Contract with EdtechX to purchase, in a private placement to occur concurrently with the consummation of the Mergers, up to 2,000,000 of units at $10.00 per unit (or up to an aggregate purchase price of $20,000,000), on substantially the same terms as the sale of units in EdtechX’s initial public offering. In connection with the execution of the Merger Agreement, the Azimut Investor irrevocably consented to purchase up to 2,000,000 units at $10.00 per unit at the closing of the transactions contemplated by the Merger Agreement. On February 26, 2020, EdtechX and Holdco jointly notified the Azimut Investor that it would be required to purchase 2,000,000 units of EdtechX, for an aggregate investment of $20,000,000, upon the closing of the business combination, representing the full amount of the Azimut Investor’s investment under the Forward Purchase Contract.

At the closing of the Mergers, Holdco will enter into a Registration Rights Agreement providing the shareholders of Meten with certain demand registration rights and piggy-back registration rights with respect to registration statements filed by Holdco after the closing. Additionally, EdtechX and Holdco will amend any existing registration rights agreements to which it is a party or similar agreements or instruments to which it is a party providing for registration rights with respect to EdtechX’s securities held by any person such that, after giving effect to the Mergers, the Holdco securities held by former EdtechX securityholders will have the same registration rights as they currently have.

EdtechX and Meten plan to complete the Mergers promptly after the EdtechX annual meeting, provided that:

•        EdtechX’s stockholders have approved the merger proposal, director proposal, and charter proposals;

•        EdtechX has net tangible assets of at least $5,000,001 upon consummation of the Mergers;

•        Holdco has received confirmation from Nasdaq that it meets all of the requirements for listing of the Holdco ordinary shares and warrants on such exchange, other than the requirement to have a sufficient number of round lot holders; and

•        the other conditions specified in the Merger Agreement have been satisfied or waived.

After consideration of the factors identified and discussed in the section entitled “The Merger Proposal — EdtechX’s Board of Directors’ Reasons for Approval of the Mergers,” EdtechX’s board of directors concluded that the Mergers are in the best interests of the EdtechX stockholders.

As a result of the Mergers, assuming that no shareholders of EdtechX elect to convert their public shares into cash in connection with the Mergers as permitted by EdtechX’s amended and restated certificate of incorporation, no Cash Election is made, and without taking into effect securities which may be issued pursuant to the Azimut Investment or in a Financing, the former shareholders of EdtechX will own approximately 14% of the Holdco Ordinary Shares to be outstanding immediately after the Mergers and the former Meten shareholders will own approximately 86% of the Holdco Ordinary Shares. If the maximum number of EdtechX public shares is converted into cash, assuming no Cash Election is made, and without taking into effect securities which may be issued pursuant to the Azimut Investment or in a Financing, such percentages will be approximately 10% and 90%, respectively. The foregoing does not take into account any adjustments to the merger consideration.

If the merger proposal is not approved by EdtechX’s stockholders at the annual meeting, the director proposal and charter proposals will not be presented at the annual meeting for a vote.

The Director Proposal

The stockholders of EdtechX will also vote on a proposal to elect nine (9) directors to the Holdco board of directors until their successors are duly elected and qualified. If management’s nominees are elected, the directors of Holdco will be Benjamin Vedrenne-Cloquet and Charles McIntyre, EdtechX’s Chief Executive Officer and Chairman of the Board, respectively, Jishuang Zhao, Siguang Peng and Yupeng Guo, the founders of Meten, Yongchao Chen, Yanli Chen, Zhiyi Xie, and Ying Cheng. See the section of this proxy statement/prospectus titled “The Director Proposal.

At closing of the Mergers, EdtechX, Holdco, Meten and certain shareholders of Meten and stockholders of EdtechX will enter into a Voting Agreement pursuant to which they will agree to nominate the above-referenced nine members to the board of directors of Holdco, and to take all actions necessary to vote all Holdco Ordinary Shares beneficially owned by them for the election of such persons until the third anniversary of the closing.

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The Charter Proposals

The stockholders of EdtechX will vote on separate proposals to approve the following material differences between the constitutional documents of Holdco and EdtechX’s current amended and restated certificate of incorporation: (i) the name of the new public entity will be “Meten EdtechX Education Group Ltd.” as opposed to “EdtechX Holdings Acquisition Corp.”; (ii) Holdco has 500,000,000 authorized ordinary shares, as opposed to EdtechX having 25,000,000 authorized shares of common stock and 1,000,000 authorized shares of preferred stock; (iii) Holdco’s corporate existence is perpetual as opposed to EdtechX’s corporate existence terminating if a business combination is not consummated by EdtechX within a specified period of time; and (iv) Holdco’s constitutional documents do not include the various provisions applicable only to special purpose acquisition corporations that EdtechX’s amended charter contains. Holdco’s amended and restated memorandum and articles of association to be in effect upon consummation of the Mergers are attached as Annex B to this proxy statement/prospectus. See the section of this proxy statement/prospectus titled “The Charter Proposals.”

The Adjournment Proposal

If EdtechX is unable to consummate the business combination at the time of the meeting for any reason, EdtechX’s board of directors may submit a proposal to adjourn the annual meeting to a later date or dates, if necessary. See the section of this proxy statement/prospectus titled “The Adjournment Proposal.”

EdtechX Initial Stockholders

As of February 24, 2020, the record date for the annual meeting, EdtechX’s shareholders prior to its initial public offering (the “initial stockholders”) beneficially owned and were entitled to vote an aggregate of 1,581,250 shares of EdtechX common stock (“initial shares”) that were issued prior to EdtechX’s initial public offering. The initial shares currently constitute approximately 20% of the outstanding EdtechX common stock.

In connection with the initial public offering, each EdtechX initial stockholder agreed to vote the initial shares, as well as any shares of EdtechX common stock acquired in the aftermarket, in favor of the merger proposal. The EdtechX initial stockholders have also indicated that they intend to vote their shares of EdtechX in favor of all other proposals being presented at the meeting. The initial shares have no conversion rights in the event a business combination is not effected in the required time period and will be worthless if no business combination is effected by EdtechX. In connection with the initial public offering, the initial stockholders entered into an escrow agreement pursuant to which their initial shares of EdtechX are held in escrow and may not be transferred (subject to limited exceptions) until, with respect to 50% of such initial shares, the earlier of six months after the date of the consummation of an initial business combination and the date on which the closing price of EdtechX’s common stock exceeds $12.50 per share for any 20 trading days within a 30-trading day period following the consummation of an initial business combination and, with respect to the remaining 50% of such initial shares, six months after the date of the consummation of an initial business combination, or earlier in each case if, subsequent to EdtechX’s initial business combination, it consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of its shareholders having the right to exchange their shares of common stock for cash, securities or other property. The Holdco Ordinary Shares the initial stockholders will receive upon consummation of the Mergers will be placed in escrow with the same terms as described above.

Date, Time and Place of Annual Meeting of EdtechX’s Stockholders

The annual meeting of the stockholders of EdtechX will be held at 10:00 a.m., local time, on March 26, 2020, at the offices of Graubard Miller, EdtechX’s U.S. counsel, The Chrysler Building, 405 Lexington Avenue, 11th Floor, New York, NY 10174, or such other date, time and place to which such meeting may be adjourned or postponed.

Voting Power; Record Date

EdtechX has fixed the close of business on February 24, 2020, as the “record date” for determining EdtechX stockholders entitled to notice of and to attend and vote at the annual meeting. As of the close of business on the record date, there were 7,906,250 shares of EdtechX common stock outstanding and entitled to vote. Each share of EdtechX common stock is entitled to one vote per share at the annual meeting. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

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Quorum and Vote for the Annual Meeting of Stockholders

A quorum of EdtechX stockholders is necessary to hold a valid meeting of stockholders. The presence in person or by proxy of the holders of a majority of the issued and outstanding shares of EdtechX common stock constitutes a quorum. Abstentions and broker non-votes will count as present for the purposes of establishing a quorum, but will not count towards the voting thresholds. The proposals presented at the annual meeting will require the following votes:

•        The approval of the merger proposal, each of the charter proposals and the adjournment proposal will require the affirmative vote of holders of a majority of the shares present in person or by proxy and entitled to vote at the annual meeting. Abstentions will count as votes “against” these proposals. Broker non-votes will have no effect on the proposals because brokers are not entitled to vote on the matter absent voting instructions from the beneficial holder.

•        The approval of the director proposal will require the affirmative vote of a plurality of the votes cast on the matter. A “withhold vote” will have no effect on the vote’s outcome, because the candidates who receive the highest number of “for” votes are elected, and if candidates run unopposed they only need a single “for” vote to be elected. Broker non-votes will have no effect on the outcome of the vote because they are typically not considered “votes cast”.

Consummation of the Mergers is conditional on approval of the merger proposal, director proposal and charter proposals.

Conversion Rights

Pursuant to EdtechX’s amended and restated certificate of incorporation, a holder of public shares may demand that EdtechX convert such shares into cash if the Mergers are consummated regardless of whether such holder votes in favor or against the Mergers or does not vote at all or is not a holder of record on the record date. Holders of public shares will be entitled to receive cash for these shares if they demand that EdtechX convert their shares into cash no later than two business days prior to the close of the vote on the merger proposal and deliver their shares to EdtechX’s transfer agent prior to the vote at the meeting. If the Mergers are not completed, these shares will not be converted into cash. If a holder of public shares properly demands conversion, EdtechX will convert each public share into a full pro rata portion of the trust account, calculated as of two business days prior to the anticipated consummation of the Mergers. As of February 24, 2020, the record date, this would amount to approximately $10.34 per share. If a holder of public shares exercises its conversion rights, then it will be exchanging its ordinary shares of EdtechX for cash and will no longer own the shares. See the section of this proxy statement/prospectus titled “Annual Meeting of EdtechX Stockholders — Conversion Rights” for a detailed description of the procedures to be followed if you wish to convert your shares into cash.

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights with respect to 20% or more of the public shares. Accordingly, all public shares in excess of 20% held by a public shareholder will not be converted to cash.

The Mergers will not be consummated if EdtechX has net tangible assets of less than $5,000,001 upon consummation of the Mergers.

Holders of EdtechX warrants will not have conversion rights with respect to such securities.

Dissenter’s Rights

EdtechX stockholders do not have dissenter’s rights under Delaware law in connection with the Mergers.

Proxy Solicitation

EdtechX is soliciting proxies on behalf of its board of directors. EdtechX will bear all of the costs of the solicitation. Proxies may be solicited by mail, telephone or in person. EdtechX has engaged Advantage Proxy, Inc. to assist in the solicitation of proxies and will pay Advantage Proxy, Inc. the fees described elsewhere in this proxy statement/prospectus.

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If you grant a proxy, you may still vote your shares of EdtechX common stock in person at the annual meeting. You may also change you vote by submitting a later-dated proxy or by revoking your proxy as described in the section of this proxy statement/prospectus titled “Annual Meeting of EdtechX Stockholders — Revoking Your Proxy.”

Interests of EdtechX’s Directors and Officers in the Mergers

When you consider the recommendation of EdtechX’s board of directors in favor of approval of the merger proposal, you should keep in mind that certain of EdtechX’s directors and executive officers have interests in such proposal that are different from, or in addition to, your interests as an EdtechX stockholder. These interests include, among other things:

•        If the business combination with Meten or another business combination is not consummated by April 10, 2020 (or such later date as EdtechX shareholders may approve), EdtechX will cease all operations except for the purpose of winding up, dissolving and liquidating. In such event, the shares of EdtechX common stock held by the initial stockholders, including EdtechX’s directors and officers, which were acquired for an aggregate purchase price of $25,000 prior to EdtechX’s initial public offering, would be worthless because the initial stockholders are not entitled to participate in any redemption or distribution with respect to such shares. Such shares had an aggregate market value of $16,350,125 based upon the closing price of $10.34 per share on Nasdaq on the record date.

•        Certain of EdtechX’s initial stockholders, including its directors and officers and their affiliates, purchased an aggregate of 3,780,000 warrants in a private placement from EdtechX for an aggregate purchase price of $3,780,000 (or $1.00 per private warrant). These purchases took place on a private placement basis simultaneously with the consummation of the initial public offering. All of the proceeds EdtechX received from these purchases were placed in the trust account. Such warrants had an aggregate market value of $1,209,600 based upon the closing price of $0.32 per warrant on Nasdaq on the record date. The private warrants will become worthless if EdtechX does not consummate a business combination by April 10, 2020 (or such later date as EdtechX shareholders may approve).

•        The transactions contemplated by the Merger Agreement provide that Benjamin Vedrenne-Cloquet and Charles McIntyre, EdtechX’s Chief Executive Officer and Chairman of the Board, respectively, will be directors of Holdco after the closing of the Mergers through 2023, and that they will each be paid annually for their board service as follows: (i) $120,000 in cash, and (ii) 20,000 Holdco Ordinary Shares. The first year’s installment of the foregoing board of director fees will be paid to Messrs. Vedrenne-Cloquet and McIntyre upon closing of the Mergers. The following years’ board fees will be paid on the anniversary of the closing date.

•        The initial stockholders, officers, and directors of EdtechX and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on EdtechX’s behalf, such as identifying and investigating possible business targets and business combinations. However, if EdtechX fails to consummate a business combination within the required period, they will not have any claim against the trust account for reimbursement. Accordingly, EdtechX may not be able to reimburse these expenses if the business combination with Meten or another business combination, is not completed by April 10, 2020 (or such later date as EdtechX shareholders may approve). As of February 24, 2020, the record date, EdtechX’s initial stockholders and their affiliates had incurred approximately $50,000 of unpaid reimbursable expenses.

•        Since EdtechX’s inception, the sponsors, which are affiliates of Benjamin Vedrenne-Cloquet and Charles McIntyre, have made loans from time to time to EdtechX to fund certain capital requirements. The working capital loans will be repaid upon closing of the Mergers. If the Mergers are not consummated and EdtechX does not consummate another business combination within the required time period, the notes will not be repaid and will be forgiven unless EdtechX has funds outside of the trust account then available to it to repay such notes. As of the date of this proxy statement/prospectus, an aggregate of $270,000 principal amount of these loans is outstanding.

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•        If EdtechX is unable to complete a business combination within the required time period, the sponsors will be liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by EdtechX for services rendered or contracted for or products sold to EdtechX, but only if such a vendor or target business has not executed such a waiver.

•        If EdtechX is required to be liquidated and there are no funds remaining to pay the costs associated with the implementation and completion of such liquidation, the sponsors have agreed to advance the funds necessary to pay such costs and complete such liquidation (currently anticipated to be no more than approximately $15,000) and not to seek repayment for such expenses.

At any time prior to the annual meeting, during a period when they are not then aware of any material nonpublic information regarding EdtechX or its securities, EdtechX, the initial stockholders, Meten, Meten’s shareholders and/or their respective affiliates may purchase shares of EdtechX common stock from institutional and other investors who vote, or indicate an intention to vote, against the merger proposal, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of common stock of EdtechX or vote their shares of EdtechX common stock in favor of the merger proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that the holders of a majority of the shares of EdtechX common stock present and entitled to vote at the annual meeting to approve the merger proposal vote in its favor and that EdtechX have in excess of the required amount of closing cash to consummate the Mergers under the Merger Agreement, where it appears that such requirements would otherwise not be met. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares of EdtechX, including the granting of put options and the transfer to such investors or holders of shares or warrants owned by the EdtechX initial stockholders for nominal value.

Entering into any such arrangements may have a depressive effect on EdtechX’s common stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares of EdtechX at a price lower than market and may therefore be more likely to sell the EdtechX common stock he owns, either prior to or immediately after the annual meeting.

If such transactions are effected, the consequence could be to cause the Mergers to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares of EdtechX common stock by the persons described above would allow them to exert more influence over the approval of the merger proposal and other proposals to be presented at the annual meeting and would likely increase the chances that such proposals would be approved. Moreover, any such purchases may make it more likely that EdtechX will have in excess of the required amount of cash available to consummate the Mergers as described above.

As of the date of this proxy statement/prospectus, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder. EdtechX will file a Current Report on Form 8-K to disclose any arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the merger proposal or the satisfaction of any closing conditions. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

Recommendation to Stockholders

EdtechX’s board of directors has unanimously determined that each of the proposals outlined above is fair to and in the best interests of EdtechX and its stockholders and recommended that EdtechX stockholders vote “FOR” the merger proposal, “FOR” the election of all of the persons nominated by management for election as directors, “FOR” each of the charter proposals, and “FOR” the adjournment proposal, if presented.

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Conditions to Closing the Mergers

General Conditions

Consummation of the Mergers is conditioned on approval of the Merger Agreement and contemplated transactions by EdtechX’s stockholders and by Meten’s shareholders. In addition, the consummation of the Mergers is conditioned upon, among other things:

•        all waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended shall have expired and no order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, entered by or with any governmental authority or statute, rule or regulation that is in effect and prohibits or enjoins the consummation of the Transactions;

•        EdtechX having at least $5,000,001 of net tangible assets remaining immediately prior to, or upon the closing of, the business combination, after taking into account payments to holders of shares of EdtechX’s common stock that properly demanded that EdtechX convert their common stock for their pro rata share of the trust account;

•        no material adverse effect with respect to EdtechX or Meten shall have occurred between the date of the Merger Agreement and the closing of the transactions;

•        the Registration Statement shall have been declared effective by the Securities and Exchange Commission; and

•        no action, suit or proceeding shall be pending or threatened by any Governmental Entity which is reasonably likely to (i) prevent consummation of any of the transactions contemplated by the Merger Agreement, (ii) cause any of the transactions contemplated by the Merger Agreement to be rescinded following consummation or (iii) affect materially and adversely or otherwise encumber the title of the Holdco Shares to be issued by Holdco in connection with the Mergers and no order, judgment, decree, stipulation or injunction to any such effect shall be in effect.

Meten’s, Holdco’s and the Merger Subs’ Conditions to Closing

The obligations of Meten, Holdco, and the Merger Subs to consummate the Mergers are also conditioned upon, among other things:

•        the accuracy of the representations and warranties of EdtechX (subject to certain bring-down standards);

•        performance of the covenants of EdtechX required by the Agreement to be performed on or prior to the closing;

•        the common stock and warrants of EdtechX continuing to be listed on the Nasdaq Capital Market up to the closing;

•        the Azimut Investment having closed and EdtechX having at least $30,000,000 in cash, net of disbursements to EdtechX public shareholders who elect to have their shares of common stock converted to cash, and together with any funds in connection with the Azimut Investment and the Financing, which amount shall be reduced to $20,000,000 in the event that the parties raise less than $10 million in the Financing (the “Minimum Cash Closing Condition”);

•        resignations and appointments of certain officers and directors as specified in the Merger Agreement;

•        the execution and delivery of the Voting Agreement by EdtechX and certain EdtechX stockholders;

•        the execution and delivery of the Amended Stock Escrow Agreement;

•        the execution and delivery of the Amended Registration Rights Agreement;

•        the execution and delivery of the Support Agreement by EdtechX and certain stockholders of EdtechX; and

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•        the approval for listing of the Holdco ordinary shares on the Nasdaq Capital Market or the New York Stock Exchange, subject to official notice of approval and satisfaction of public holder requirements;

•        EdtechX shall be in compliance with the reporting requirements under the Securities Act and Exchange Act.

EdtechX’s Conditions to Closing

The obligations of EdtechX to consummate the Mergers are also conditioned upon, among other things:

•        the accuracy of the representations and warranties of Meten, Holdco, and the Merger Subs (subject to certain bring-down standards);

•        performance of the covenants of Meten, Holdco, and the Merger Subs required by the Merger Agreement to be performed on or prior to the closing;

•        the execution and delivery of the Voting Agreement by Meten and certain shareholders of Meten; and

•        the execution and delivery of the Lock-up Agreements by certain shareholders of Meten.

Waivers

EdtechX, Meten, Holdco or the Merger Subs may waive any inaccuracies in the representations and warranties made to such party contained in the Merger Agreement or in any document delivered pursuant to the Merger Agreement and waive compliance with any agreements or conditions for the benefit of itself or such party contained in the Merger Agreement or in any document delivered pursuant to the Agreement. Notwithstanding the foregoing, pursuant to EdtechX’s current amended and restated certificate of incorporation, EdtechX cannot consummate the business combination if it has less than $5,000,001 of net tangible assets upon the consummation of the business combination.

Termination

The Merger Agreement may be terminated as follows:

•        by mutual written consent of EdtechX and Meten;

•        by either EdtechX or Meten if the business combination is not consummated on or before April 1, 2020, provided that the right to terminate the Merger Agreement will not be available to any party whose action or failure to act has been a principal cause of or primarily resulted in the failure of the business combination to occur on or before such date and such action or failure to act constitutes a breach of the Merger Agreement;

•        by either EdtechX or Meten if a governmental entity shall have issued an order, decree or ruling or taken any other action, in any case having the effect of permanently restraining, enjoining or otherwise prohibiting the Mergers, which order, decree, judgment, ruling or other action is final and non-appealable;

•        by either EdtechX or Meten if, at the EdtechX shareholder meeting called to approve the Mergers, the Mergers fail to be approved by the required vote (subject to any adjournment or recess of the meeting);

•        by either EdtechX or Meten if EdtechX has less than $5,000,001 of net tangible assets remaining immediately prior to, or upon the closing of, the transactions, after taking into account payments to holders of EdtechX common stock that properly demanded that EdtechX convert their common stock for their pro rata share of the trust account;

•        by either EdtechX or Meten if the other party has breached any of its covenants or representations and warranties in any material respect which cannot be cured or, if curable, and has not been cured within thirty days of the notice of an intent to terminate, provided that the terminating party is itself not in material breach;

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•        by Meten if the Minimum Cash Closing Condition is not met; or

•        by either EdtechX or Meten upon a breach of the exclusivity covenants contained in the Merger Agreement.

In the event of the termination of the Merger Agreement by EdtechX due to Meten’s failure to materially comply with any applicable legal requirements, then Meten will pay EdtechX within two business days after such termination a termination fee equal to $125,000. In the event of the termination of the Merger Agreement by EdtechX due to Meten’s breach of the exclusivity covenants contained in the Merger Agreement, then Meten will pay EdtechX within two business days after such termination a termination fee equal to $350,000. In the event of the termination of the Merger Agreement by Meten due to EdtechX’s failure to materially comply with any applicable legal requirements, then EdtechX will pay Meten within two business days after such termination a termination fee equal to $125,000. In the event of the termination of the Merger Agreement by Meten due to EdtechX’s breach of the exclusivity covenants contained in the Merger Agreement, then EdtechX will pay Meten within two business days after such termination a termination fee equal to $350,000.

Anticipated Tax Consequences of the Mergers

The parties to the Merger Agreement intend that the Mergers, taken together, qualify as an integrated exchange for U.S. federal income tax purposes under Section 351 of the Code, and the Merger Agreement provides that all parties to the Merger agreement shall report the Mergers consistent with such tax treatment unless otherwise required by a final determination under applicable tax law. However, there is no guidance directly on point on how the provisions of Section 351 of the Code apply in the case of a merger of corporations with no active business and only investment-type assets. Furthermore, there is absence of guidance directly on point as to whether Section 367 of the Code applies in connection with transactions involving a merger with a non-U.S. corporation, followed by a merger with a U.S. corporation. Accordingly, due to the absence of such guidance, it is not possible to predict whether the IRS or a court considering the issue would take or sustain a position indicating the transaction qualifies as a tax free transaction under either section.

If the Mergers qualify as an integrated exchange under Section 351 of the Code and are not subject to Section 367, a U.S. Holder of EdtechX common stock should not recognize gain or loss upon the exchange of its EdtechX common stock solely for Holdco Shares pursuant to the EdtechX Merger. A U.S. Holder’s aggregate tax basis in the Holdco Shares received in connection with the EdtechX Merger should be the same as his aggregate tax basis in the EdtechX common stock surrendered in the transaction. In addition, the U.S. Holder’s holding period of the Holdco Shares received in the EdtechX Merger generally should include his holding period of the EdtechX common stock surrendered in the EdtechX Merger.

We anticipate that a U.S. Holder whose EdtechX warrant automatically converts into a warrant to purchase Holdco Shares will recognize gain or loss upon such exchange equal to the difference between the fair market value of the Holdco Warrant received and such U.S. Holder’s adjusted basis in its EdtechX warrant. A U.S. Holder’s basis in its Holdco Warrant deemed received in the Merger will equal the fair market value of such warrant. A U.S. Holder’s holding period in its Holdco Warrant will begin on the day after the Merger. However, due to lack of clear authority, the issue is not free from doubt, and U.S. Holders should seek the advice of their tax advisors.

For a more detailed description of the material U.S. federal income tax consequences of the Mergers, please see the information set forth in “The Merger Proposal — Anticipated Material Federal Income Tax Consequences of the Mergers to EdtechX and Its Stockholders.”

Anticipated Accounting Treatment of the Mergers

The Business Combination will be accounted for as a “reverse merger” in accordance with U.S. GAAP. Under this method of accounting EdtechX will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Meten issuing stock for the net assets of EdtechX, accompanied by a recapitalization. The net assets of EdtechX will be stated at fair value which approximates historical costs as EdtechX has only cash and short-term liabilities. No goodwill or other intangible assets relating to the Mergers will be recorded. Operations prior to the business combination will be those of Meten.

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Regulatory Matters

The Mergers and the transactions contemplated by the merger agreement are not subject to any additional federal or state regulatory requirement or approval, except for the filing of required notifications and the expiration or termination of the required waiting periods under the HSR Act and filings with the Cayman Islands and the State of Delaware necessary to effectuate the transactions contemplated by the Merger Agreement.

Risk Factors

In evaluating the proposals to be presented at the annual meeting, a stockholder should carefully read this proxy statement/prospectus and especially consider the factors discussed in the section entitled “Risk Factors.”

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SELECTED HISTORICAL FINANCIAL INFORMATION

Meten and EdtechX are providing the following selected historical financial information to assist you in your analysis of the financial aspects of the Mergers.

EdtechX’s balance sheet data as of September 30, 2019 and income statement data for the three and nine months ended September 30, 2019 are derived from EdtechX’s unaudited financial statements, included elsewhere in this proxy statement/prospectus.

EdtechX’s balance sheet data as of December 31, 2018 and income statement data for the period from May 15, 2018 (inception) through December 31, 2018 are derived from EdtechX’s audited financial statements included elsewhere in this proxy statement/prospectus.

Balance Sheet Data:

 

September 30,
2019

 

December 31,
2018

Trust account

 

$

65,412,193

 

$

64,516,435

Total assets

 

$

65,790,958

 

$

65,247,452

Total liabilities

 

$

1,617,749

 

$

1,456,370

Value of common stock subject to possible redemption

 

$

59,173,204

 

$

58,791,078

Stockholders’ equity

 

$

5,000,005

 

$

5,000,004

Income Statement Data:

 

Three Months
Ended
September 30,
2019

 

Nine Months
Ended
September 30,
2019

 

For the
Period from
May 15,
2018
(inception)
through
December 31,
2018

Loss from operations

 

$

(170,903

)

 

$

(507,902

)

 

$

(210,484

)

Interest earned on marketable securities held in trust

 

$

355,212

 

 

$

1,214,150

 

 

$

327,511

 

Unrealized loss on marketable securities held in trust

 

$

(32,977

)

 

$

(83,455

)

 

$

(9,826

)

Net income

 

$

81,169

 

 

$

382,127

 

 

$

51,867

 

Basic and diluted net loss per share

 

$

(0.06

)

 

$

(0.17

)

 

$

(0.08

)

Weighted average shares outstanding, basic and diluted

 

 

2,158,094

 

 

 

2,144,682

 

 

 

1,635,292

 

Meten presents below its summary consolidated financial and operating data for the periods indicated. The following summary consolidated statements of comprehensive income/(loss) data for the years ended December 31, 2016, 2017 and 2018, summary consolidated balance sheets data as of December 31, 2017 and 2018, and summary consolidated cash flow data for the years ended December 31, 2016, 2017 and 2018 have been derived from Meten’s audited consolidated financial statements included elsewhere in this proxy statement/prospectus. In addition, the following summary consolidated statements of comprehensive income/(loss) data for the nine months ended September 30, 2018 and 2019, summary consolidated balance sheets data as of September 30, 2019, and summary consolidated cash flow data for the nine months ended September 30, 2018 and 2019 have been derived from Meten’s unaudited condensed consolidated financial statements included elsewhere in this prospectus. Meten has prepared the unaudited condensed consolidated financial statements on the same basis as Meten’s audited consolidated financial statements, except for the adoption of ASU No. 2016-02, “Leases” on January 1, 2019, as mentioned in note 3 to Meten’s unaudited condensed consolidated financial statements included elsewhere in this prospectus. The summary consolidated financial data should be read in conjunction with Meten’s consolidated financial statements and related notes and “Meten’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this proxy statement/prospectus. The consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Meten’s historical results are not necessarily indicative of its results for any future periods.

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For the Year Ended
December 31,

 

For the Nine Months Ended
September 30,

   

2016

 

2017

 

2018

 

2018

 

2019

   

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

   

(in thousands)

               

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

Summary Consolidated Statements of Comprehensive (Loss)/Income Data:

   

 

   

 

   

 

   

 

   

 

   

 

   

 

Revenues

 

801,545

 

 

1,149,721

 

 

1,424,234

 

 

199,258

 

 

1,064,617

 

 

1,094,967

 

 

153,192

 

General adult ELT(1)

 

572,135

 

 

785,480

 

 

903,756

 

 

126,440

 

 

687,235

 

 

600,460

 

 

84,007

 

Junior ELT

 

 

 

 

 

65,490

 

 

9,162

 

 

36,369

 

 

129,480

 

 

18,115

 

Overseas training services

 

180,606

 

 

228,294

 

 

223,601

 

 

31,283

 

 

174,313

 

 

151,804

 

 

21,238

 

Online ELT

 

46,915

 

 

121,196

 

 

212,302

 

 

29,702

 

 

152,933

 

 

188,690

 

 

26,399

 

Other English language-related services(2)

 

1,889

 

 

14,751

 

 

19,085

 

 

2,671

 

 

13,767

 

 

24,533

 

 

3,433

 

Cost of revenues

 

(344,810

)

 

(467,967

)

 

(627,996

)

 

(87,860

)

 

(457,881

)

 

(558,775

)

 

(78,175

)

Gross profit

 

456,735

 

 

681,754

 

 

796,238

 

 

111,398

 

 

606,736

 

 

536,192

 

 

75,017

 

Operating expenses

   

 

   

 

   

 

   

 

   

 

   

 

   

 

Selling and marketing expenses

 

(268,643

)

 

(373,065

)

 

(425,217

)

 

(59,490

)

 

(315,586

)

 

(323,254

)

 

(45,225

)

General and administrative expenses

 

(198,431

)

 

(237,509

)

 

(293,157

)

 

(41,014

)

 

(208,944

)

 

(256,382

)

 

(35,869

)

Research and development expenses

 

(18,187

)

 

(21,217

)

 

(26,178

)

 

(3,662

)

 

(20,075

)

 

(25,365

)

 

(3,550

)

(Loss)/income from operations

 

(28,526

)

 

49,963

 

 

51,686

 

 

7,232

 

 

62,131

 

 

(68,809

)

 

(9,627

)

Other income (expenses):

   

 

   

 

   

 

   

 

   

 

   

 

   

 

Interest income

 

2,578

 

 

4,103

 

 

1,150

 

 

161

 

 

836

 

 

677

 

 

95

 

Interest expenses

 

(769

)

 

(9

)

 

(8

)

 

(1

)

 

(7

)

 

(1,541

)

 

(216

)

Foreign exchange gain/(loss), net

 

67

 

 

(184

)

 

21

 

 

3

 

 

48

 

 

(25

)

 

(3

)

Gains on disposal of subsidiaries

 

 

 

 

 

 

 

 

 

 

 

583

 

 

82

 

Gains on available-for-sale investments

 

890

 

 

2,485

 

 

3,916

 

 

548

 

 

3,909

 

 

 

 

 

Government grants

 

4,434

 

 

4,046

 

 

7,817

 

 

1,094

 

 

5,832

 

 

5,184

 

 

725

 

Equity in income/(loss) on equity method investments

 

(842

)

 

(150

)

 

1,668

 

 

233

 

 

2,913

 

 

3,590

 

 

502

 

Others, net

 

2,890

 

 

(373

)

 

1,649

 

 

231

 

 

(555

)

 

3,085

 

 

432

 

(Loss)/income before income
tax

 

(19,278

)

 

59,881

 

 

67,899

 

 

9,501

 

 

75,107

 

 

(57,256

)

 

(8,010

)

Income tax expense

 

(7,869

)

 

(19,539

)

 

(14,454

)

 

(2,022

)

 

(13,187

)

 

(2,296

)

 

(321

)

Net (loss)/income

 

(27,147

)

 

40,342

 

 

53,445

 

 

7,479

 

 

61,920

 

 

(59,552

)

 

(8,331

)

Less: Net loss attributable to non-controlling interests

 

(2,862

)

 

(218

)

 

(3,809

)

 

(533

)

 

(664

)

 

(1,796

)

 

(251

)

Net (loss)/income attributable to shareholders of the Company

 

(24,285

)

 

40,560

 

 

57,254

 

 

8,012

 

 

62,584

 

 

(57,756

)

 

(8,080

)

Less: Accretion of redeemable owners’ investment

 

10,577

 

 

19,000

 

 

9,814

 

 

1,373

 

 

9,814

 

 

 

 

 

Net (loss)/income available to shareholders of the Company

 

(34,862

)

 

21,560

 

 

47,440

 

 

6,639

 

 

52,770

 

 

(57,756

)

 

(8,080

)

Unaudited Non-GAAP Financial Measures:

   

 

   

 

   

 

   

 

   

 

   

 

   

 

Adjusted net (loss)/income(3)

 

(20,590

)

 

48,228

 

 

75,859

 

 

10,615

 

 

75,029

 

 

(37,976