Investors, Required, Technology - Written by on Tuesday, July 5, 2011 20:20 - 0 Comments

Providence Equity Partners to buy Blackboard Inc. for $1.64 billion




So private equity firm Providence Equity Partners is snatching up Blackboard Inc. for $1.64 billion in a deal they announced Friday.

Blackboard makes the college course-management software found on many campuses. The companies hope to close the deal in the last quarter of 2011. Will this kick off more deals in the Ed Tech space? Here’s what folks are saying about this deal:

The Chronicle of Higher Education writes:

The announcement came after the company said in April that it had received offers, setting off fevered speculation about the identity of its suitors…

The buyout is a big change in direction for one of higher education’s most prominent vendors, which had faced mounting pressure to both produce quarterly profits and shore up a declining market share for course-management software against an increasingly well-financed field of competitors.

After going public in 2004, Blackboard has grown steadily in size, buying two major competitors, Angel Learning and WebCT, and expanding into new markets, including analytics, mobile software, and emergency messaging. But the company seemed to strain at times in its attempt to meet the growth expectations of investors while focusing on the education market, which is often slow to make new investments.

Of course, Blackboard president Ray Henderson told investors private owners should help the company regain market share. “Private equity now provides us an alternative ownership model that’s more agile,” he writes. Some colleges might fear new private equity owners will slash costs and quality of the product while driving up prices. The company said in statements and blog posts, however, that it will keep pricing in normal ranges “for the foreseeable future.”

Dow Jones Newswires writes on the mechanics of the deal:

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.

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 for laundry, vending and printing.

Bloomberg News Story on the deal:
With the deal, Providence adds to a for-profit education portfolio that includes college operator Education Management Corp. and English language specialist Study Group Pty Ltd. Blackboard’s software for online course materials and class discussions will help Providence profit from a surge in Web- based education, said Sterling Auty, an analyst with JPMorgan Chase & Co. in New York.

By 2015 about 3.5 million students will take at least 80 percent of their courses online in the U.S, according to Eduventures Inc., a Boston-based higher education research firm. That compares with 2 million students in 2009.

Washington-based Blackboard has expanded offerings to include online and mobile learning platform Blackboard Collaborate and Blackboard Transact, a payment product that allows college students to use their identification cards for purchases on and off campus.

Providence, by the way,  manages roughly $23 billion and says it focuses on media, communication, information and education companies. Last year, it purchased educational services provider Study Group. In 2006, it joined Goldman Sachs Capital Partners and Leeds Equity Partners to buy Pittsburgh, Pa.,-based Education Management.


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