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Instructure Agrees to $2 Billion Acquisition by Private Equity Firm Thoma Bravo

By Henry Kronk
December 04, 2019

Instructure, the developers of the Canvas learning management system, announced on December 4 that it had signed an agreement to be acquired by Thoma Bravo, a tech-focused private equity firm, for the price of $2 billion in cash.

The deal follows an announcement just under three weeks ago that Instructure was exploring a few strategic options, including a potential private equity buyout. The company has been publicly traded since 2015. Share holders will receive $47.60 in cash per share if and when the deal closes. 

Terms of the Deal

C-suite personnel and upper management will not change, according to the press release, and CEO Dan Goldsmith will continue in his role.

The deal has yet to be approved by Instructure stockholders. The agreement announced on Wednesday also involves a 35-day “go-shop” period wherein Instructure’s board of directors can accept and solicit other offers. Pending other deals and shareholder approval, the deal is expected to close in the first quarter of 2020.

Instructure stock has steadily climbed following their 2015 IPO, which debuted on the New York Stock Exchange at $16 per share. That share price climbed to $53.69 per share as recently as November 18. It has since corrected to $48.75 following the announcement of the agreement.

Beyond the financial details, the company believes going private will bring about a positive change.

“Instructure believes the opportunity to become a private Company will provide additional flexibility and position us to invest more strategically to drive innovation for our customers,” said CEO Dan Goldsmith, in a statement. “We look forward to working closely with all parties to complete this transaction and enter into our next chapter of growth and industry leadership.”

The company has yet to turn a profit, in part due to highly aggressive investments in product and sales early in their history. Some have speculated that the company is nearing their breakeven point.

Speculations About Instructure Moving Forward

Statements from Thoma Bravo, meanwhile, were purely positive.

“Instructure’s Canvas product is the gold standard for learning management systems in the global education market,” said Thoma Bravo Managing Partner Holden Spaht, in a statement. “We are excited to partner with Dan and the senior management team to support continued investment and innovation in the Company’s market leading products and world class customer support.”

Others believe there is more information to glean from Wednesday’s statement.

LMS market analyst Phil Hill of MindWires Consulting pointed out that Instructure made note of the strength of Canvas in their announcement, but didn’t refer at all to Bridge, their corporate LMS.

It has been clear for the past months and years that Bridge doesn’t have the same appeal in the corporate market that Canvas does in higher ed and K-12.

Goldsmith himself drew attention to this in the company’s Q3 earnings call.

“While Bridge bookings continue to grow, especially with our employee development solutions introduced over the summer,” Goldsmith said, “it is still not delivering at the level I want it to be at.”

While well-informed, these remain predictions. For now, the public will only be able to speculate about what lies in store for Instructure.

Featured Image: Garrett, Flickr.

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