By Svea Herbst-Bayliss
BOSTON (Reuters) - Rivulet Capital, a large investor in Instructure Inc, on Thursday said it will resist the U.S. educational software company's plan to sell itself to private equity firm Thoma Bravo for $2 billion, calling the deal too cheap and too hurried.
Rivulet Capital, which owns 5.23% of Instructure, said in a regulatory filing it plans to vote against the transaction.
We "strongly oppose the proposed going-private transaction" where Thoma Bravo would pay $47.60 a share for the company, the filing said, adding that it "significantly undervalues the Company.
Moreover it was wrong to run a "rushed, 3-week strategic alternatives process over the Thanksgiving holiday" and have a proposed 35-day go shop period that would include more holidays, Christmas and New Year's, the hedge fund wrote in the filing.
Rivulet is the first large investment firm to speak out publicly on Instructure's plans after other investors had privately and publicly pushed the Salt Lake City-headquartered company to consider selling part or all of itself.
On October 31, Reuters reported that activist hedge fund Sachem Head Capital Management has built a stake in the company and was pushing for a full sale process. Instructure's stock price jumped as much as 6% on the news of Sachem Head's stake, ending the session at $46.73, a touch below Thoma Bravo's offer.
Days later Praesidium Investment Management, which has owned the stock for some time, joined the public push for the company to consider a sale. The stock price climbed to $53 a share by late November but tumbled on news of what Thoma Bravo was planning to pay. On Thursday afternoon it was trading at $48.55 a share.
Now neither Sachem Head nor Praesidium are saying how they feel about the proposed deal. Rivulet declined to comment beyond what it said in the filing. Instructure and Thoma Bravo did not immediately respond to a request for comment.
While Rivulet says the process to sell Instructure has been conducted hastily, the parties appear to have been speaking for a few months. According to the Agreement and Plan of Merger filed with regulators on December 4, Thoma Bravo signed a confidentiality agreement on June 18, 2019.