Instructure Sale Update: No bids received, a third of investor shares now against sale

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3 replies
  1. Bill
    Bill says:

    Of course, those investors coming out against the sale aren’t likely because of concerns for market or customer impact, but rather because they simply feel the price is too low.

    Should Thoma Bravo raise their price, then objections could very will melt away. According to Yahoo! Finance, INST has ~38M shares outstanding. 1.5% of that is 570K shares. Each dollar higher is more than $1/2M to Lateef and about $1.5M to Oberndorf, with each dollar representing a >2% increase in return over the agreed $47.6 strike price.

    If there is room for a higher return on the books (such as additional cost cutting, tax reduction, etc.) then the current investors will fight for the higher price, as they feel the value is already there, but unrecognized. The disagreement doesn’t seem to be about strategic direction, higher industry upside, or better choices. It’s just about Thoma Bravo allegedly getting too much value from the current share holders on too low a price. Thoma Bravo could raise their offer, or they could go into the vote daring shareholders to turn it down (given reportedly no other bidders).

    What would be interesting is, if it goes to vote and gets rejected, what would the next life for INST look like, with an exec team that seems out of ideas and ready to bail after a collectively short time on the job.

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  2. Rhegan
    Rhegan says:

    What’s been fascinating about this discussion is how little Josh Coates gets mentioned. Josh stepped down as CEO as a first step toward liquidating his large stock position in Instructure. Josh hand-picked Dan Goldsmith for president, with a promise of the CEO role shortly thereafter. Of the “10.1% of shares controlled by the directors and executive officers who will vote FOR the merger agreement,” nearly all are held by Josh. Josh has never shown a true passion for education. He wanted to build a technology company, take it public, and then cash out. The last part has been problematic as the chairman of the company. The only way to convert the stock to cash is to sell the company, which was his plan from the beginning. This story isn’t about Dan Goldsmith or Thoma Bravo. They are just willing participants. It’s about Josh finding a way to walk away with his $100 million in cash.

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    • JMarcus
      JMarcus says:

      Rhegan – Thank you for bringing this up. You are right, the story is about the history of Instructure and Josh Coates. I have worked with Canvas for years, but I was always shocked at how inappropriate and disconnected Josh. Every year at InstructureCon he would be derogatory and make off color comments about people. Once, he offended women, adjunct professors, and the deaf in the span of 5 mins. He never interacted with customers, and I heard he worked part time. What kind of CEO does that? What kind of Board lets a CEO do that? It seems that Josh never liked Instructure or cared about education. Look at the facts too, Josh was leading the sale, he makes 2 million dollars selling stock on November 13th above the sale price and then Instructure announces they are selling the company on November 14th. Seriously! It is all about the money for Josh Coates. Thank goodness he is gone.

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