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Instructure under activist pressure to explore a sale: Bloomberg
Posted on Thursday, 07 November 2019 09:36
Praesidium Investment Management has joined the push for Instructure to explore a disposal, Bloomberg reported, which comes just one week after Reuters said Sachem Head Capital Management is pressuring the education software group to do the same.
Citing co-founder and managing partner of the investment group Kevin Oram, the news provider observed that the New York-based hedge fund has identified a significant number of private equity firms and strategic players that may be interested in the target’s management platform Canvas.
He added that the unit controls about 38.0 per cent of the market and could be worth around USD 2.50 billion.
Shares in Instructure closed down slightly to USD 46.14 yesterday, giving the group a market capitalisation of USD 1.73 billion.
Praesidium has been discussing views with the group’s management, according to Oram, who added other potential buyers may be interested in the money-losing employee development division Bridge, as well as the whole company.
Two people close to the situation told Reuters that Sachem Head Capital has built up a stake in Instructure and plans to push the US-based firm to explore alternatives.
The Salt Lake City-headquartered business is an educational technology company that offers learning and personal development courses through Canvas, an online learning management system (LMS), and cloud-based corporate LMS Bridge.
In the nine months ended 30th September 2019, Instructure recorded revenue of USD 189.29 million, a 23.5 per cent increase from USD 153.29 million in the corresponding period of 2018.
Non-generally accepted accounting principles net loss for the same timeframe narrowed to USD 14.14 million (Q1-3 2018: USD 20.37 million).
The company is expecting to post revenue of between USD 257.10 million and USD 258.10 million in the financial year ending 31st December 2019.
Zephyr, the M&A database published by Bureau van Dijk, shows there have been 517 deals targeting educational services providers announced worldwide since the start of 2019.
In the largest of these, BGH Capital, via BGH BidCo, acquired Australian university group Navitas for AUD 2.10 billion (USD 1.45 billion).
© Zephus Ltd