On Sep.30, NetEase Youdao ("Youdao" or the "Company") (NYSE: DAO) announced that the company plans to divest K9 after-school tutoring business for academic subjects ("Academic AST Business”) and expects to complete the divestiture by the end of 2021. Youdao claimed that there are no guarantees as to the final time of the proposed transaction or whether it will be completed.
According to the announcement, "Youdao submitted an application to the competent local government for approval of the proposed disposal of its Academic AST Business to a buyer with which Youdao is in discussions. The total consideration for the transaction will be determined after arm’s length negotiations between Youdao and the buyer, subject to definitive agreements to be entered into by the relevant parties. The proposed transaction involves the disposal of Youdao’s Academic AST Business, including the transfer of the related employees and assets and liabilities (including existing service contracts with enrolled students), to the buyer. "
In the second quarter of 2021, revenues for Academic AST Business accounted for approximately 24% of its total revenues.
On September 3, 2021, the Ministry of Education, Ministry of Civil Affairs and State Administration for Market Regulation of the PRC jointly published the Notice that all curriculum-based tutoring institutions for primary and middle school students should complete the registration process as non-profit organizations by the end of this year. The Notice stressed that tutoring institutions should stop student enrollment and charging fees before the transition completes.