Vista’s Takeover of Pluralsight Opposed by Glass Lewis

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A planned takeover of Pluralsight Inc. by Vista Equity Partners was dealt a blow with another prominent shareholder advisory firm coming out against the deal.

Glass Lewis & Co. recommended shareholders vote against the offer, in part because it appeared to favor Vista over other potential buyers, and didn’t provide other bidders with the opportunity to submit proposals on the same timeline and with the information Vista did. The firm also said the takeover price wasn’t compelling.

“Given its numerous shortcomings, we question whether the process succeeded in achieving the more favorable offer available for Pluralsight shareholders. We also question the board’s rationale for selling the company at this point in time and we do not believe sufficient weight has been given to the potential benefits of Pluralsight continuing as a stand-alone entity,” Glass Lewis said in its report, which was issued Friday.

Vista agreed in December to acquire Pluralsight for $20.26 a share in cash, a 6.7% premium to the previous trading day’s close. Its shares closed Friday above the offer price at $21.05 a piece in New York, giving the company a market valuation of $3.1 billion.

Glass Lewis’ opposition to the deal comes after another shareholder advisory firm, Institutional Shareholder Services Inc., also came out against the proposal last week. ISS cited concerns about the sale process, an uncompelling valuation and a limited downside risk to rejecting the bid as its rational for opposing the deal.

Pluralsight said earlier it disagreed with ISS’s conclusion, and that the deal delivers significant and immediate value for investors. It argued it also eliminates significant execution risks and other challenges facing Pluralsight.

Two of Pluralsight’s investors, Eminence Capital and Akaris Global Partners, have also come out against the deal, and said they intend to vote against it.

“We are pleased that the two leading proxy advisory firms, ISS and Glass Lewis, recognize that Pluralsight conducted a flawed sales process resulting in a transaction that deprives shareholders of substantial potential future value creation,” Ricky Sandler, Eminence chief executive officer, said in a statement.

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