Advisory agency urges Pluralsight shareholders to say no to Vista acquisition

Pluralsight insists the deal is of value to investors.

The Pluralsight transaction committee has fought back against advice issued to existing shareholders urging them not to approve a proposed acquisition by Vista Equity Partners. 

The deal was first announced in December 2020. Under the terms of the agreement, Vista Equity Partners would purchase outstanding Pluralsight shares for $20.26 each. 

In total, this would value the all-cash acquisition at approximately $3.5 billion. 

Pluralsight is based in Utah and is an enterprise technology company with a specialization in employee management software, as well as training and development for in-demand skills such as data science, cloud technology, and artificial intelligence (AI). 

While expected to close in the first half of 2021, on February 17, Eminence Capital LP, the owner of roughly 4.85% of Pluralsight -- or approximately six million Class A Common Stock shares -- announced that the Institutional Shareholder Services Inc. (ISS) has conducted a review of the deal and has urged shareholders to vote against the transaction. 

ISS is a proxy advisory firm. According to the bulletin, the ISS has recommended a "vote against" the deal in a meeting scheduled for March 2.

The ISS cited an "uncompelling" market value and failures in the sale process.

According to Eminence CEO Ricky Sandler, the "ISS recommendation underscores our strong belief that Pluralsight conducted a deeply flawed and highly manipulated sales process designed to benefit management and Vista Equity Partners at the expense of Pluralsight shareholders."

Pluralsight, however, insists that the ISS has "reached the wrong conclusion" and says that the acquisition price provides a 25% - 26% premium to shareholders based on a 30-day volume-weighted average price ahead of the purchase announcement.  

Pluralsight's transaction committee says that the ISS analysis does not recognize current "structural" challenges impacting the company as it operates in a "highly competitive, rapidly evolving and fragmented market, which has modest barriers to entry, low switching costs, and increasing numbers of well-capitalized competitors."

In addition, the committee says that the offer price was negotiated to reach a level 23% higher than Vista's original proposal, having engaged with a total of 14 interested parties. Vista was the only one to submit a proposal, although 12 parties entered confidentiality agreements. 

"Moreover, neither market rumors nor the transaction announcement itself attracted any other parties to the process," the company says. "Pluralsight shareholders should ask themselves: if Pluralsight is worth significantly more, as ISS suggests, why didn't anyone else attempt to capture that valuation gap during this extensive process or in the intervening months?"  

Pluralsight's transaction committee, therefore, recommends a "yes" vote. However, according to Bloomberg, at least one other investor -- Akaris Global Partners -- intends to vote against the purchase. 

ZDNet has reached out to Vista Equity Partners and will update when we hear back. 

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