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  • [Updated] According to Bloomberg: Instructure fails to get votes to approve Thoma Bravo acquisition

[Updated] According to Bloomberg: Instructure fails to get votes to approve Thoma Bravo acquisition

Author

Phil Hill
February 12, 2020

Update 2/13: According to SEC filings, Thoma Bravo submitted a revised proposal “to acquire each issued and outstanding share of Instructure common stock for $48.50 per share in a two-step tender offer . . . further proposed that the tender offer would be commenced within five business days of the date of the entry into an amended and restated merger agreement.” The Instructure board unanimously (after recusing CEO Dan Goldsmith and Director Kevin Thompson) decided to not pursue the new proposal and adjourn the meeting until Feb 14, 2020. The explanation given:

During the course of that discussion, members of the Board expressed concern about whether the revised proposal provided stockholders with sufficient certainty of closing in light of the feedback concerning the Merger that the Board has received from over 20 stockholders since the execution of the Merger Agreement, the ISS and Glass Lewis reports and recommendations with respect to the Merger, and the timing implications of the new tender offer structure.

This update seems to confirm Bloomberg reporting that they do not have the votes of shareholders to accept the deal or even the revised deal. See Twitter thread here.

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According to Bloomberg, the news organization that has fairly consistently covered inside news on the pending Instructure sale to private equity firm Thoma Bravo, the company has failed to get the votes needed to approve the deal. There will be no acquisition of the company based on the current deal. As described in the article this afternoon:

Thoma Bravo failed to win the necessary support to acquire educational software company Instructure Inc. after investors balked at the original terms, according to people familiar with the matter.

The private equity firm required a majority of Instructure shareholders to support the deal. Preliminary tallies ahead of a shareholder vote planned for Thursday showed they failed to reach that threshold, the people said, asking not to be identified because the matter is private.

Thoma Bravo will now have to decide whether to increase its bid or walk away from the deal.

To put it simply, despite unusually-detailed descriptions of the sales process within the proxy statements, Instructure never convinced a majority of investors that they had run a fair process and gotten the best deal. Sometimes a cigar is a cigar – the investors and proxy advisory companies meant what they said.

I should be very clear – this is based on Bloomberg’s reporting, and the vote itself does not officially get tallied until Thursday, February 13th, at 9am MST. But Bloomberg has been accurate in its reporting thus far.

We will report tomorrow on the official vote and will correct if any of this information proves to be inaccurate. In the meantime, for those wanting background information:

Further to the Jan 28 thread above, Bloomberg summarized:

Compounding matters, two prominent shareholder advisory firms — Institutional Shareholder Services Inc. and Glass Lewis & Co. — recommended investors vote against the deal, citing concerns about the process, price and other issues.

Both said there was little risk for the Salt Lake City-based company to remain a standalone entity.

Disclosure: Instructure is a subscriber to the MindWires LMS Market Analysis data service (as are many of their competitors), and we have a number of investment firms who are also subscribers to the service and pay for in-depth market data and research.