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Thoma Bravo Fails to Win Support for Instructure Deal

Thoma Bravo Fails to Win Support for Instructure Deal

(Bloomberg) -- Thoma Bravo failed to win the necessary support to acquire educational software company Instructure Inc. after investors balked at the original terms, according to people familiar with the matter.

The private equity firm required a majority of Instructure shareholders to support the deal. Preliminary tallies ahead of a shareholder vote planned for Thursday showed they failed to reach that threshold, the people said, asking not to be identified because the matter is private.

Thoma Bravo will now have to decide whether to increase its bid or walk away from the deal.

Representatives for Thoma Bravo and Instructure weren’t immediately available for comment.

Instructure fell less than 1% to close at $47.34 in New York trading Wednesday, giving the company a market value of $1.8 billion.

Thoma Bravo agreed in December to acquire the company for $47.60 a share, a price that received investor pushback. Praesidium Investment Management, Rivulet Capital, Lateef Investment Management and Oberndorf Enterprises wrote letters to the board expressing their concerns about the sales process and price.

Shareholders representing about a third of the investor base said they planned to vote against the deal in interviews with Bloomberg and through public statements.

Compounding matters, two prominent shareholder advisory firms -- Institutional Shareholder Services Inc. and Glass Lewis & Co. -- recommended investors vote against the deal, citing concerns about the process, price and other issues.

Both said there was little risk for the Salt Lake City-based company to remain a standalone entity.

Instructure’s board supported the original deal terms, arguing the transaction came after 11 months of talks with potential suitors and followed a strategic review in which 40 parties were contacted and 19 confidentiality agreements signed.

To contact the reporter on this story: Scott Deveau in New York at sdeveau2@bloomberg.net

To contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, Michael Hytha, Matthew Monks

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