Instructure Holdings, Inc. (NYSE: INST), a prominent learning ecosystem provider, said on Thursday it has agreed to be acquired by KKR, a global investment firm, in a transaction valued at approximately $4.8 billion.
Under the terms of the agreement, Instructure shareholders will receive $23.60 per share in cash, which is a 16% premium over the share price on May 17, 2024.
The acquisition will result in Instructure becoming a privately held company, with its common stock delisted from the New York Stock Exchange. The deal, which includes participation from Dragoneer Investment Group, will also see the purchase of shares owned by Thoma Bravo, Instructure's current majority owner.
Steve Daly, CEO of Instructure, and the existing management team will continue in their roles post-acquisition. KKR plans to support Instructure's growth, particularly in its Canvas and Parchment products, as part of its investment strategy. Instructure aims to achieve $1 billion in revenue by 2028 and has already impacted around 200 million learners in over 100 countries.
KKR is financing the transaction through its North America Fund XIII and intends to create an equity ownership program for Instructure's 1,700 employees following the closure of the deal.
The Instructure Board of Directors has unanimously approved the transaction, which is expected to close later this year, pending customary closing conditions and regulatory approvals. Instructure stockholders holding a majority of the voting securities are anticipated to approve the transaction via written consent, negating the need for further action by other stockholders.
Instructure will publish its second quarter 2024 financial results on August 2, 2024, but will not host a live conference call. J.P. Morgan Securities LLC and Macquarie Capital served as financial advisors to Instructure, with Kirkland & Ellis LLP as legal advisor. KKR received financial advice from Morgan Stanley & Co. LLC, Moelis (NYSE:MC) & Company LLC, and UBS Investment Bank, with Simpson Thacher & Bartlett LLP as legal advisor.
InvestingPro Insights
As Instructure Holdings, Inc. (NYSE: INST) transitions into a new chapter with its acquisition by KKR, investors are looking at the company's financial health and future prospects with keen interest. According to recent data from InvestingPro, Instructure's market capitalization stands at $3.32 billion. While the company has been facing challenges, as reflected by a negative P/E ratio of -76.13 and an adjusted P/E ratio for the last twelve months as of Q1 2024 standing at -190.8, there are positive indicators on the horizon.
InvestingPro Tips suggest that Instructure's net income is projected to grow this year, providing a potential upside to its current valuation challenges. Additionally, the company has caught the attention of analysts, with 10 of them revising their earnings estimates upwards for the upcoming period. This could signal a turning point in the company's performance and investor sentiment.
On the operational front, Instructure has demonstrated a solid revenue growth of 13.5% over the last twelve months as of Q1 2024, with a notable quarterly growth of 20.65%. Gross profit margins remain strong at 65.93%, indicating the company's ability to maintain profitability in its core operations despite its overall non-profitable status over the past year.
For those keeping an eye on the stock's recent performance, InvestingPro data shows a robust return over the last three months at 18.26%, despite a recent hit over the last week with a total return of -9.94%. Investors considering leveraging these insights for their strategy can find additional InvestingPro Tips for Instructure at https://www.investing.com/pro/INST. There are currently 11 more tips available, which can be accessed with a subscription. Use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription to stay ahead with real-time data and expert analysis.
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