Pluralsight Investor Eminence Opposes $3.5 Billion Vista Bid

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Another sizable investor in Pluralsight Inc. has come out against its takeover by Vista Equity Partners, arguing the proposed $3.5 billion deal was the product of a rushed process designed to serve one purpose: sell the company.

Eminence Capital, which owns nearly 5% of the software company, said it was outraged by the disclosures around the deal and planned to vote against the transaction unless the price was “materially” improved.

“Vista’s offer does not come close to compensating Pluralsight’s shareholders for the health of its current financial performance nor its long-term value, especially given how well-positioned the company is for future growth,” Eminence Chief Executive Officer Ricky Sandler said in a letter to Pluralsight’s board that was obtained by Bloomberg.

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. Pluralsight shares have not closed below the offer price since Dec. 14. Pluralsight rose 1% in trading Monday to $21.50 as of 1:33 p.m. in New York, giving the educational software company a market value of roughly $3.2 billion.

The deal already has the support of shareholders that own the majority of the voting rights in Pluralsight, the company said at the time. The transaction, however, also requires the support of most of the other investors who aren’t party to a tax agreement that dates back to Pluralsight’s initial public offering in 2018.

Pluralsight said in December that the Vista buyout would deliver immediate cash value for shareholders. Being a private company would also allow it to move faster and be more agile to deliver on its strategic vision. Pluralsight said in regulatory filings that nine out the potential 14 suitors had signed confidentiality agreements, but only Vista submitted a final bid. A board committee also negotiated a 70% reduction in the amount owed in the event of a change of control related to its tax agreement to $127 million as part of the process.

“The transaction with Vista, which delivers significant and immediate cash value to shareholders, was the result of a thorough review of alternatives conducted by the board of directors,” the company said in a statement Monday. “The board is confident that this all-cash transaction with Vista is in the best interests of the company and our shareholders.”

Last month, another Pluralsight investor, Akaris Global Partners, also came out against the deal, arguing that the purchase price undervalued the company.

Eminence said the disclosures around the deal showed the software company “feverishly” instituting a sales process after the approach from Vista. Less than four weeks later, it demanded interested parties submit final bids -- with the exception of its original suitor.

“When reviewing the facts and circumstances surrounding this merger agreement, we can only come to one conclusion: motivations completely at odds with maximizing shareholder value drove a sham process designed to support a pre-determined decision to sell to Vista at an artificially low price in order to benefit management and Vista at the expense of shareholders,” Sandler said.

Eminence has also made a formal books and records request to get additional details around the sale process.

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