KKR swoops in with $4.8bn deal to acquire Instructure Holdings just before major growth

In a significant development for the education technology sector, Instructure Holdings, Inc., a leading global learning ecosystem provider, has announced it will be acquired by investment funds managed by KKR, a major global investment firm. The all-cash transaction is valued at approximately $4.8 billion, with KKR offering $23.6 per share, representing a 16 percent premium over Instructure’s unaffected share price of $20.27 as of May 17, 2024.

KKR to Acquire Instructure in Major Deal

The acquisition comes as a pivotal moment for Instructure, a company renowned for its innovative learning management systems, including its flagship products Canvas and Parchment. The transaction, unanimously approved by Instructure’s Board of Directors, is expected to close later this year, contingent on customary closing conditions and regulatory approvals. Upon completion, Instructure will transition from a publicly traded company to a privately held entity, while continuing to operate from its headquarters in Salt Lake City.

Leadership Continuity and Growth Strategy

Despite the shift in ownership, Instructure’s management team, led by CEO Steve Daly, will remain in place. Daly emphasized that KKR’s alignment with Instructure’s long-term vision and growth strategy was a key factor in the decision. He noted that KKR’s commitment would bolster Instructure’s investment in technology and innovation, crucial for expanding its global learning platform.

Daly highlighted that the leadership team has laid out an ambitious strategy for growth, focusing on core markets and unlocking new opportunities. KKR’s support is expected to accelerate these plans, further strengthening Instructure’s position as a leader in the global education technology market.

KKR’s Vision for Instructure

Webster Chua, a Partner at KKR, remarked on Instructure’s unique position within the academic sector, noting that the company has evolved into a comprehensive platform delivering strong student outcomes. Chua expressed anticipation about collaborating with Instructure’s management team to drive growth and scale the company’s global portfolio of products.

KKR will also implement a broad-based equity ownership program for Instructure’s approximately 1,700 employees, allowing them to benefit from the company’s future success. This approach aligns with KKR’s belief that employee engagement through ownership is crucial for building stronger companies.

Thoma Bravo’s Role and Future Prospects

Holden Spaht, Managing Partner at Thoma Bravo, Instructure’s previous majority owner, praised the transaction as a favorable outcome for all shareholders. Spaht reflected on the successful transformation of Instructure into a scaled platform under Thoma Bravo’s stewardship and expressed excitement about the company’s future under KKR’s ownership.

Brian Jaffee, a Partner at Thoma Bravo, also commended Instructure’s evolution into a leading platform technology provider and expressed optimism about KKR’s ability to build on the company’s strong foundation.

Transaction Details and Advisors

J.P. Morgan Securities LLC served as the lead financial advisor to Instructure, with Macquarie Capital also advising the company. Kirkland & Ellis LLP acted as legal advisor to Instructure. On the other side, Morgan Stanley & Co. LLC, Moelis & Company LLC, and UBS Investment Bank advised KKR, with Simpson Thacher & Bartlett LLP providing legal counsel to the investment firm.

Impact on the Education Technology Landscape

Instructure’s acquisition by KKR marks a significant moment in the education technology sector. The deal not only underscores the growing importance of digital learning solutions but also highlights the continued investment in technology that enhances educational outcomes. As Instructure transitions to private ownership, its ongoing commitment to providing high-quality educational tools and credentials will remain a focal point, promising further advancements in the learning ecosystem.