Instructure—Creator of Canvas LMS—Acquired by Private Equity Firm for $2 Billion in Cash

Associate Editor

Instructure, the public company that sells the Canvas learning management system in K-12, announced today its plans to be acquired by Thoma Bravo, LLC, a private equity investment firm, in an all-cash transaction valuing the company at about $2 billion.

With the purchase, Thoma Bravo said it plans to increase Instructure’s investment in education technology innovation and expand internationally.

Instructure, which has been a publicly-traded company since 2015, will become a private company again under the agreement. It recently announced its intention to explore different ownership options. Besides its presence in K-12, the company sells products in higher education and to corporations.

“After a thorough review of strategic alternatives, the Instructure board of directors is pleased to reach this agreement,” said Josh Coates, executive chairman of the board at Instructure, in the official statement. The company’s management team, led by CEO Dan Goldsmith, will continue at the helm of the company in their current roles, according to the announcement.

Becoming a private company, “will provide additional flexibility and position us to invest more strategically to drive innovation for our customers,” said Goldsmith in the 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.”

[Update: An Instructure shareholder with a 5 percent stake in the company, Rivulet Capital, says it will vote against the sale. Rivulet takes issue with what it says was the “rushed, 3-week strategic alternatives process over the Thanksgiving holiday,” according to Seeking Alpha. Rivulet also cites concerns about Instructure’s governance and potential conflicts of interest.

In a filing, Rivulet says it currently reserves the right to “effect transactions that would change the number of shares they may be deemed to beneficially own.”]

Brian Jaffee, a principal at Thoma Bravo said, “We’ve followed the impressive Instructure growth story for many years and believe Canvas is a highly unique vertical market SaaS leader with exciting scale and future growth potential. We look forward to building on the strong momentum in the business and accelerating growth and product investment both organically and through M&A.”

Earlier this year, Instructure acquired MasteryConnect, which designs and delivers formative and interim assessments to help bolster personalized and mastery-based learning. In 2017, Thoma Bravo acquired Frontline Education, an administrative and HR software solutions provider to educational organizations across the U.S.

Instructure’s board of directors has unanimously approved the transaction and recommended that its stockholders approve the merger, according to the announcement. A special meeting of Instructure’s stockholders will be held as soon as practicable following the filing of a definitive proxy statement with the U.S. Securities and Exchange Commission and subsequent mailing to its stockholders.

Instructure’s headquarters will remain in Salt Lake City, Utah, with regional offices across the United States and abroad, the company said.

The transaction’s completion is subject to approval by Instructure stockholders and certain regulatory and antitrust authorities. While it is expected to close in the first quarter of 2020, the agreement includes a 35-day “go-shop” period expiring on January 8, 2020, which permits Instructure’s board of directors and advisors to solicit alternative acquisition proposals from third parties, according to the announcement. Instructure will have the right to terminate the merger agreement to enter into a superior proposal subject to the terms and conditions of the merger agreement.

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