UPDATE: Providence Equity To Buy Blackboard For About $1.64 Billion
01 Luglio 2011 - 6:43PM
Dow Jones News
As expected, Blackboard Inc. (BBBB) on Friday said Providence
Equity Partners agreed to buy it for about $1.64 billion in cash,
ending months of buyout speculation.
The buyout firm is offering $45 a share, a 3.7% premium over
Thursday's close and a 21% premium over its trading price in April
before disclosing it was evaluating strategic alternatives.
Providence Equity Partners would also assume $130 million in debt
under the deal.
Various press outlets had identified Providence as the likely
buyer over the past few weeks. The price isn't terribly surprising,
despite several analysts keeping a price target on Blackboard stock
of $50 or more, as "most people assumed the take-out price would
have a four in front of it instead of a five," according to Amy
Junker, an analyst with Robert W. Baird.
Blackboard makes software that allows schools and professional
organizations to offer teaching and learning online. It also makes
software applications that help campuses manage e-commerce and
payments, such as those for laundry, vending and printing.
The company has continued to boost its top line thanks to an
expanded suite of products, several of which seek out high-growth
areas like mobile phones. Still, the firm faces tough competition
from a number of peers in the area of learning management
systems.
Scott Berg, an analyst with Feltl & Co., said the bid values
Blackboard, on an adjusted earnings basis, between recent purchases
of Lawson Software, on the low end, and Epicor Software, on the
high end.
Berg said Lawson and Epicor, which he formerly followed, have a
less attractive business model for their software than does
Blackboard, and he had expected a bid closer to $50 than $45 per
share. Blackboard, he said, has been penalized for flat revenue
over the past three quarters due to a lack of acquisitions and for
the dilutive nature of acquisitions it had made earlier.
"It's pretty clear that a strategic bidder willing to pay north
of $50 [per] share did not materialize," said Tom Roderick, who
follows Blackboard for Stifel Nicolaus. "I would merely
characterize it as fair but, in the absence of another bidder (a
process which seems to have exhausted itself), fair is likely to be
the best outcome," he added, echoing the other analysts who don't
expect a higher bid to emerge.
Blackboard, which has a market capitalization of about $1.5
billion, said in April it had hired Barclays Capital to explore a
sale after unidentified parties expressed interest in buying the
company.
The deal is expected to close in the fourth quarter, subject to
approval by Blackboard's shareholders.
Shares of Blackboard, which had been halted ahead of the
disclosure, changed hands recently at $44.16 apiece, up 1.8% on the
session and 1.9% below the $45 offer. The stock has risen nearly
22% over the past three months during the search for a buyer and
traded as high as $50.26 on the day it announced it had retained
Barclays to explore a sale.
Such a discount to the offer price suggests investors and merger
arbitrageurs are confident that Providence Equity's $45 bid will
win the day and the merger will close on schedule.
-By Maxwell Murphy, Dow Jones Newswires; 212-416-2171;
maxwell.murphy@dowjones.com; and Drew FitzGerald, 212-416-2909;
andrew.fitzgerald@dowjones.com
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