Arlington-based Rosetta Stone said Friday that its board of directors is evaluating a purchase offer from New York-based private-equity firm RDG Capital, an overture that sent its languishing stock soaring.
Terms of the offer were not disclosed, but shares of the language-learning software company jumped nearly 20 percent, to $7.62, on the disclosure.
The company has struggled as sales of its flagship CD-ROMs dropped and it pivoted to selling software on the Internet, expanding its English-language programs and adding educational products aimed at children. It purchased two companies last year — brain-game maker Vivity Labs and French competitor Tell Me More — to grow its education arm.
Russell Glass, managing director of RDG Capital, confirmed that the group has made an offer for Rosetta Stone.
“As a firm with experience in the education and media industries, we feel that we can help Rosetta navigate through its transition from a consumer-focused company to an enterprise and education-focused company,” he said in an interview.
RDG Capital has a reputation as an activist firm, and Glass has worked with activist investor and businessman Carl Icahn.
“It’s often easier to navigate through a business transition as a privately owned company than a public one,” he said.
Rosetta Stone recorded a loss of $19.8 million in the past quarter, compared with a loss of $20 million from a year ago, while the company’s sales decreased 4 percent in the same period.
Chief executive Stephen Swad stepped down in March after three years at the helm, and John Haas was named interim president and chief executive as the company hunts for a replacement. Rosetta laid off 70 employees in Virginia two years ago as it sought to expand in other cities.
A Rosetta Stone spokeswoman said the company would not discuss details of the offer.