Instructure Holdings, Inc., a leading learning ecosystem, recently announced that it has entered into a definitive agreement to be acquired by investment funds managed by KKR, a leading global investment firm, for $23.60 per share in an all-cash transaction valued at an enterprise value of approximately $4.8 billion. The deal marks a potential return in private equity activity following a period of dormancy caused by high interest rates and hampered debt financing for leveraged buyouts.
The per-share purchase price represents a premium of 16 per cent over the Instructure’s unaffected share price of $20.27 as of May 17, 2024, the last trading day before media reports regarding a potential transaction. KKR, with participation from Dragoneer Investment Group, will acquire all outstanding shares, including those owned by Instructure’s existing majority owner, Thoma Bravo. This leading software investment firm took the company public in 2021.
The Instructure ecosystem of products enhances the lives and outcomes of students, professional learners, and educators. It has approximately 200 million learners across more than 100 countries and a thriving community of over 1,000 partners. With its expansive network of educators, learners, and partners, the platform is committed to broadening its platform and delivering $1B in revenue by 2028.
As part of the agreement, the Instructure management team, led by CEO Steve Daly, will continue to lead the company in their current roles. KKR will support Instructure as it increases investment in technology and innovation across its leading global learning platform, including its core Canvas and Parchment products.
Steve Daly commented on the acquisition:
Our leadership team laid out an aggressive go-forward strategy in our investor day presentation earlier this year. We believe Instructure has a significant growth runway as we focus on core markets, unlocking new opportunities and continuing to build the Instructure Learning Ecosystem. It was immediately apparent that KKR is aligned with our long-term vision and growth strategy, and we look forward to working closely with them. Together, we build on our position as the education platform that powers learning for a lifetime, transforming education into opportunities for all learners globally.
KKR is investing in infrastructure through its North America Fund XIII.
KKR will support Instructure in creating a broad-based equity ownership programme to allow all of the company’s employees to further participate in the benefits of ownership after the transaction closes. This strategy is based on the belief that team member engagement through ownership is a key driver in building stronger companies. Since 2011, over 50 KKR portfolio companies have awarded billions of dollars of total equity value to over 100,000 non-senior management employees.
Webster Chua, Partner at KKR, added:
Given its unique positioning at the center of academic life, Instructure has a distinct opportunity to be a true end-to-end partner to students, teachers, and administrators. Under Thoma Bravo’s stewardship, Instructure has evolved into an expansive platform focused on delivering strong student outcomes. We look forward to working with Steve and the Instructure management team to accelerate growth and continue scaling its global portfolio of products.
Holden Spaht, managing partner at Thoma Bravo, also stated:
This transaction results from a deliberate and thoughtful process and ultimately has an excellent outcome for all shareholders. We’ve thoroughly enjoyed working with Steve and the Instructure management team to transform the business into a scaled, durable platform, and we are excited to watch the next chapter of growth unfold under KKR’s ownership.
The transaction, which the Instructure Board unanimously approved of the Directors, is expected to close later this year, subject to customary closing conditions, including receipt of required regulatory approvals. In addition to approval by the Instructure Board of Directors, Instructure stockholders holding most of the outstanding voting securities of the Instructure are expected to approve the transaction by written consent. Once the preceding written permission has been delivered, no further action by other Instructure stockholders will be required to approve the transaction.
Upon completion of the transaction, Instructure’s common stock will no longer be listed on the New York Stock Exchange, and Instructure will become a privately held company headquartered in Salt Lake City.
J.P. Morgan Securities LLC acted as the lead financial advisor, Macquarie Capital also worked as a financial advisor to Instructure and Kirkland & Ellis LLP is the legal advisor to Instructure. Morgan Stanley & Co. LLC, Moelis & Company LLC and UBS Investment Bank acted as financial advisors, and Simpson Thacher & Bartlett LLP acted as legal advisor to KKR.
