Instructure Considering Sale Options
Instructure, maker of the popular Canvas LMS, announced this morning that they are reviewing strategic alternatives.
This news comes on the heels of several articles about investor pressure being applied on the company.
April 2019 – Activist investor Praesidium takes 5+% stake in Instructure and pushes thesis that Instructure would be more valuable by selling off Bridge (corporate learning market) and concentrating on Canvas (academic market).
Early October 2019 – Instructure announces investor day on December 3rd where “management team will describe the company’s new strategy and operating model, key decisions about future financial goals, and the plan for focused capital allocation”. (couldn’t find direct link anymore, so using Google cache)
Late October 2019 – Activist investor Sachem Head takes a stake in Instructure and pushes company “to explore alternatives, including selling itself, two people familiar with the matter said”.
November 2019 – Praesidium joins Sachem Head in call for Instructure to explore a sale.
Today – Jana joins activist investor pool.
As part of today’s announcement [emphasis added]:
Disclosure: I will note more prominently than usual that Instructure is a subscriber to the MindWires LMS Market Analysis data service (as are many of their competitors), and that we have a number of investment firms who are also subscribers to the service and pay for in-depth market data and research.
There will be more analysis coming in the future, but I would note several items to set context, especially for academic readers:
Bridge is a corporate learning LMS created by Instructure (not a corporate acquisition) starting in 2015, the same year that Instructure went public. This additional product line, with its larger available market, was a key part of Instructure’s IPO story.
When Blackboard went through a similar process and actually went private (i.e. a private equity firm acquired the company, taking them off of the public stock market), the process lasted from early summer 2011 until October 2011. That should give some sense of the timeframe of these decisions.
Blackboard also considered a sale in 2015 but did not actually change ownership – these processes do not always result in a sale.
At the risk of annoying some readers (again), I have pointed out that “there are strong arguments that company financial health in 2018 / 19 for the providers will continue to have an outsized impact on the future of LMS offerings”. Consider PowerSchool’s planned acquisition of Schoology and Blackboard’s recent debt ratings news (more on that in future post). This news is as much about the LMS market as it is about one company.
For academic community, it is worth noting that much of the investor-based pressure is for Instructure to focus more on supporting Canvas, not less. Instructure management has made it a point to say that they are increasing investment in Canvas, but today’s news puts even more emphasis on that need.
Keep watching – this should be interesting for the LMS market.
Update 11/14: Added note about Jana disclosing investment. Also added bullet about Bridge history.