Instructure Sells to Thoma Bravo After Successful Tender Offer

Mergers and Acquisitions

Instructure Sells to Thoma Bravo After Successful Tender Offer

Mar 23, 2020

Update: Private equity firm Thoma Bravo completed the nearly $2 billion deal Tuesday and Instructure became a privately held company.

Original: Just a few weeks ago, investors griped about the price a private equity firm offered to buy Instructure, a Salt Lake City-based learning management system provider best known for its Canvas product, which is widely used in the U.S. higher education market.

Now that U.S. markets have recorded their worst week since the 2008 financial crisis, $49 a share to take the publicly traded edtech company private doesn’t seem so bad.

“We do not believe the deal would have successfully gone through pre-COVID-19,” according to a report from investment bank D.A. Davidson on Monday. The bank estimates a multiple of about 6.6 times Instructure’s revenue over the next twelve months.

Instructure and Thoma Bravo said that the deal should close Tuesday following the private equity firm’s purchase of enough shares to get at least 64.4 percent of aggregate voting power in the company, according to a statement Monday. The stock traded at about $49 at market opening Monday.

Thoma Bravo bought the shares through a “tender offer” that closed over the weekend. Thoma Bravo made an offer to buy shares from every shareholder in the company instead of its previous plan of seeking approval from certain shareholders that could vote on the deal. Several shareholders with voting power had publicly denounced Thoma Bravo’s offer as too low and Instructure’s sales process as not transparent.

Mitch Benson, Instructure's chief product officer, said in an email that the company has seen an increase of more than 40 percent over normal use for this time of year.

"The demand for interactive conferencing is more than 10X what it has been historically," Benson wrote. "And services like chat and Canvas Studio are seeing significant increases with nearly three videos a second being uploaded into Studio. Our user community online has also seen a significant increase in activity -- nearly 2.5X normal activity."

  

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