Sometimes competitors decide they're better off together than apart. That's exactly what happened Wednesday when Udemy Inc. (UDMY) announced plans to merge with Coursera, sending Udemy shares soaring over 22%.

The Deal Structure

Here's how the numbers shake out: Coursera is combining with Udemy in an all-stock deal that values the merged entity at $2.5 billion in implied equity. Udemy shareholders will get 0.8 shares of Coursera common stock for every share of Udemy they currently own. When the dust settles, existing Coursera stockholders will own roughly 59% of the combined company, while Udemy shareholders will hold the remaining 41% on a fully diluted basis.

Coursera also indicated it might launch a stock repurchase program after the deal closes, which could be a signal of confidence in the merged company's financial position.

Why This Makes Sense

According to Udemy, Coursera's consumer and enterprise segments fit hand-in-glove with its own business, particularly when it comes to skills training, workforce development, and career advancement. The companies are betting big on selling AI-enhanced tools and data-driven insights to enterprise clients, universities, and government organizations.

But perhaps the most compelling aspect of the merger is the projected cost savings. The combined company expects to slash operating expenses by $115 million within two years of closing, which should give it a much stronger financial profile to compete in the crowded ed-tech space.

"By combining the highly complementary strengths of Coursera and Udemy, we will be in an even stronger position to address the global talent transformation opportunity, unlock a faster pace of innovation, and deliver valuable experiences and outcomes for our learners and customers," said Greg Hart, CEO of Coursera.

Udemy shares were trading at $6.57 at the time of publication, up 22.35% on the day.