February 13, 2020 / 1:51 PM / 5 days ago

Instructure rejects increased takeover bid from Thoma Bravo

NEW YORK (Reuters) - Instructure Inc’s (INST.N) plan to sell itself to Thoma Bravo hit a snag on Thursday when the U.S. educational software company said it had rejected a higher offer from the private equity firm and postponed the vote for shareholders.

Thoma Bravo, which originally offered $47.60 a share for Instructure, boosted its offer by 90 cents to $48.50 on Wednesday but Instructure said in a regulatory filing that it chose not to accept the higher bid. Instructure shares were down 1.7% at $46.55 on Thursday morning.

The raised bid came just hours before a deadline for shareholders to cast their vote on the proposed merger. Several investors had been publicly critical of Thoma Bravo’s initial price and how Instructure agreed to sell itself to Thoma Bravo.

Large shareholders’ resistance to the original deal prompted board members to worry that even a sweetened offer might be insufficient to appease them, the company said in the filing, explaining why it rejected the eleventh-hour price increase.

“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 company said.

The company also pushed out the voting deadline to Friday.

Praesidium Investment Management, Rivulet Capital, Lateef Investment Management and Oberndorf Enterprises all contacted Instructure’s board to express their concerns with some saying the initial Thoma Bravo bid undervalued the company. And a number of shareholders said they would vote against the deal. Late Wednesday there was talk that the company had not secured enough votes from shareholders to accept the proposed deal.

Critics found fresh support earlier this year when proxy advisory firms Institutional Shareholder Services and Glass Lewis & Co both recommended that shareholders vote against the takeover, citing the price and process in which Thoma Bravo was accepted.

Instructure defended its initial decision to sell itself to the private equity firm, saying it had spent months speaking with potential buyers and that even during a go-shop period no higher offer was made.

Some shareholders and the proxy advisory firms said Instructure could easily remain a standalone company and flourish.

Reporting by Svea Herbst-Bayliss in Boston and Greg Roumeolitis in New York; Editing by Jonathan Oatis and Matthew Lewis

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