Vendor Infrastructure Canvas LMS Considers Sale

The board of learning management system provider Instructure is open to taking the public company private.

In a statement Thursday, Instructure said it could sell to a strategic partner or continue as a stand-alone public company as it explores “strategic alternatives to maximize shareholder value.” The Salt Lake City-based company canceled an upcoming briefing event for financial analysts on Dec. 3 to focus on strategy instead.

“The company has not set a formal timeline for this exploration, nor made any decisions regarding strategic alternatives at this time,” the statement said. “While Structure is looking for opportunities, there is no guarantee that the process will lead to a transaction. The company does not expect to make any additional public comments on these matters until the board approves a specific action or otherwise concludes the process.

Instructure will use JPMorgan as financial advisor and Cooley as legal advisor. During Instructure’s latest quarterly earnings call, CEO Dan Goldsmith told investors “nothing is on the table” in response to a question about a sale or spin-off of his enterprise LMS product Bridge, whose customers took longer than expected to deploy the product enterprise-wide.

Instructure has come under intense scrutiny in recent months from activist investors, according to a report by investment bank SunTrust Robinson Humphrey. The bank puts Bridge in a $30 million+ business that is “burning tens of millions in cash” with a hard-to-decipher growth rate. SunTrust estimates that Bridge still represents less than 20% of the total company.

The bank is also disappointed with the cancellation of the financial analyst event, which may have provided new insights into Bridge and Instructure’s flagship product, the LMS Canvas.

“We are not surprised by this news as the company announced a strategic review of the Corporate Bridge business during the last earnings call and reviewing the future of the business as a whole would be the next natural progression” , according to the SunTrust report.

The last time a publicly traded learning management system provider went private was Blackboard, in 2011. Private equity firm Providence Equity Partners bought Blackboard for $1.64 billion. This was about three times the next twelve months’ revenue that Blackboard had reported at the time. SunTrust reported that Instructure could be worth between $62 and $70 per share if taken private.

Shares of Instructure were up about 2% Thursday through midday Monday.

About Marjorie C. Hudson

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