Pluralsight Independent Transaction Committee and Board of Directors Reiterate Support for Transaction with Vista Equity Partners
Pluralsight (NASDAQ: PS) announced a definitive agreement to be acquired by Vista Equity Partners for $20.26 per share in cash, representing a 25% premium over its 30-day average price. The independent Transaction Committee and Board believe this transaction provides immediate and certain value to shareholders. Despite recent revenue growth, Pluralsight faces significant competition and risks that have led to stock volatility. The merger is seen as a strategic move to maximize shareholder value, especially in light of challenges in the competitive landscape.
- Acquisition offers $20.26 per share, a 25% premium to the 30-day average price.
- Transaction provides immediate and certain value to shareholders.
- Independent review process ensured best outcome for shareholders.
- Ongoing competition and market volatility may limit future growth.
- Past performance included failure to meet Wall Street expectations, affecting stock stability.
- Potential dilution of shares for future growth needs may concern investors.
All-Cash Transaction Delivers Significant, Immediate and Certain Value to Shareholders
Independent Transaction Committee and Pluralsight Board of Directors Comment on Process and Strategic Benefits of the Transaction
Urge Shareholders to Vote “FOR” the Proposed Transaction
SILICON SLOPES, Utah, Feb. 01, 2021 (GLOBE NEWSWIRE) -- Pluralsight, Inc. (NASDAQ: PS), the technology workforce development company, today issued the following shareholder letter from Pluralsight's Board of Directors recommending shareholders vote “FOR” the pending acquisition of Pluralsight by affiliates of Vista Equity Partners (“Vista”), announced on December 13, 2020:
Dear Pluralsight Shareholders:
Pluralsight recently announced a value-maximizing transaction for its shareholders under which it will be acquired by affiliates of Vista, a leading global investment firm, for
THE TRANSACTION PROVIDES SIGNIFICANT, IMMEDIATE AND CERTAIN VALUE TO PLURALSIGHT SHAREHOLDERS
The Transaction Committee and the Pluralsight Board each believes that the transaction with Vista is in the best interests of all Pluralsight shareholders. The transaction delivers certainty in the form of an all-cash offer with committed financing at compelling premia and multiples, including:
- Approximately
25% premium to the 30-day volume-weighted average price of the Class A common stock prior to announcement of the transaction; - Approximately
26% premium to the undisturbed closing price of the Class A common stock on November 9, 2020 (the last trading day before market rumors that Pluralsight was in discussions regarding a potential sale); - 9.2x and 8.1x the last 12 months’ and next 12 months’ revenue, respectively, which compare favorably to precedent M&A transactions; and
- 0.54x the Rule of 40 Adjusted next 12 months’ revenue multiple, which compares favorably to precedent M&A transactions.
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/105e8c29-9593-44a8-b48d-7a40784babcf
THE TRANSACTION REFLECTS A CAREFUL CONSIDERATION OF PLURALSIGHT’S PERFORMANCE AND RISKS TO ITS LONG-TERM PROSPECTS
Pluralsight competes in a highly competitive, rapidly evolving and fragmented market. While Pluralsight’s total addressable market is substantial, so is the extent of our competition. In the past few years, Pluralsight has seen significant changes in the competitive landscape through (1) the emergence of new, well-capitalized competitors; (2) industry consolidation; and (3) the continued evolution of free video tutorial options from user-generated communities leveraging YouTube and other social media platforms. We compete with a range of in-person ILT, legacy enterprise SaaS, consumer-centric SaaS and free solutions, including those backed by some of the largest companies in the world. Moreover, the discretionary nature of our services creates significant volatility based on changes in customer budgets and timing, making Pluralsight particularly susceptible to changes in market conditions.
Since we went public, we have at times not met Wall Street expectations for billings in our quarterly financial results. In addition, market expectations for Pluralsight have declined, with Wall Street’s two-year revenue CAGR target decreasing from
While we are pleased to have delivered growth in revenue and billings this quarter, albeit continuing to lag historical year-over-year growth rates, the Transaction Committee and the Pluralsight Board remain concerned about the challenges facing Pluralsight and the impact—in terms of stock price volatility—that these challenges will have on the value of our shares for shareholders. In addition, Pluralsight increasingly believes that a meaningful portion of its future growth is likely to be inorganic and will occur through the purchase of other companies and product offerings. The pursuit of these growth opportunities is likely to require substantial additional capital resources. These capital resources might only be available at significant cost to Pluralsight (if available at all) or through equity offerings that would potentially significantly dilute our shareholders. Even if capital is available, these growth opportunities may not be successful, thereby increasing the risk to Pluralsight’s shareholders associated with Pluralsight remaining a public company.
Given the significant risks to Pluralsight’s business, long-term prospects and shareholder value, Pluralsight’s Transaction Committee and Board concluded that the price offered by Vista was superior to the potential long-term value that might be achieved by Pluralsight on a standalone basis. Both the Transaction Committee and the Pluralsight Board believe that unless Pluralsight can achieve sustained superior growth, there is a significant risk that Pluralsight’s multiple could decline meaningfully and remain depressed for some time. In contrast, the transaction with Vista provides immediate and certain value to our shareholders.
PLURALSIGHT CONDUCTED A ROBUST, INDEPENDENT PROCESS TO MAXIMIZE SHAREHOLDER VALUE
The Pluralsight Board takes its responsibility to shareholders seriously. When Vista approached Pluralsight about pursuing a potential transaction, the Pluralsight Board immediately took significant steps to provide for the best outcome for our shareholders. In addition to forming the independent Transaction Committee and empowering it to explore strategic alternatives, the Pluralsight Board engaged highly qualified financial and legal advisors who assisted the independent Transaction Committee in conducting a broad and deep review of strategic alternatives, as detailed in the definitive proxy statement that we filed with the SEC at https://www.sec.gov/Archives/edgar/data/1725579/000119312521022776/d20870ddefr14a.htm. During the process, the independent Transaction Committee and the Pluralsight Board considered a range of strategic options to maximize value, including continuing as a standalone public company. The process involved 14 parties (consisting of six potential strategic acquirers and eight financial sponsors). Of these 14 potential acquirers, 12 entered into confidentiality agreements and received due diligence materials. After extensive engagement with these 12 potential acquirers, only Vista made a firm proposal to acquire Pluralsight. In addition, over the course of nearly three months, the Transaction Committee and its advisors engaged in extensive negotiations that ultimately resulted in a
Beyond the market-check process described above, the Pluralsight Board implemented three significant procedural protections for the benefit of our shareholders.
- Independent, disinterested Transaction Committee. The Transaction Committee was ultimately composed only of the members of the Pluralsight Board who were independent of management and were not party to Pluralsight’s tax receivable agreement (TRA). This ensured that independent directors who had no interest in the TRA led discussions with potential acquirers.
- Fully empowered Transaction Committee with the ability to say “no.” The Transaction Committee was fully empowered by the Pluralsight Board to oversee and direct the process of exploring strategic alternatives. The Pluralsight Board also agreed that it would not engage in a business combination or similar transaction unless it was first approved or recommended by the Transaction Committee. At no point could the Pluralsight Board step in front of the Transaction Committee and assume the primary role in negotiating a transaction. This further ensured that independent directors who had no interest in the TRA led discussions with potential acquirers.
- Majority-of-the-minority shareholder approval. Recognizing the unique challenges of Pluralsight’s multi-class capital structure and wishing to give shareholders a voice in the future of their company, the Pluralsight Board also agreed that Pluralsight would not engage in a business combination or similar transaction unless it was approved by the holders of a majority of the voting power of Pluralsight capital stock not held by certain interested persons, including parties to the TRA and officers of Pluralsight. This ensures that Pluralsight’s controlling shareholder cannot approve the transaction unilaterally and that the transaction requires the affirmative approval of a majority of the shareholders without any interest in the TRA.
These non-waivable protections were implemented prior to any substantive acquisition discussions and formed a key component in the Pluralsight Board’s willingness to consider any transaction. They are intended to, and should, give shareholders great confidence that their interests were top-of-mind throughout the process.
THE TRA AMENDMENT REPRESENTS A SIGNIFICANT BENEFIT TO PLURALSIGHT SHAREHOLDERS
Concurrent with our initial public offering, Pluralsight entered into the TRA with certain of our historical shareholders. The TRA entitles the TRA beneficiaries to a significant portion of the tax savings that Pluralsight realizes in connection with certain routine share exchange transactions engaged in by the TRA beneficiaries. The TRA requires an automatic acceleration of payments owed to the TRA beneficiaries upon a change of control of Pluralsight. Agreements such as the TRA are common among public companies, and there are many examples of other public companies with similar agreements.
Importantly, the TRA is a contractual obligation of Pluralsight. Payments under the TRA are not a windfall to the TRA beneficiaries; they are obligations of Pluralsight that were negotiated with the TRA beneficiaries at the time of Pluralsight’s initial public offering and fully disclosed at that time. Pluralsight’s payment obligations under the TRA must be satisfied in connection with any change of control of Pluralsight. Those liabilities cannot be altered unilaterally by Pluralsight.
Once it was clear that any reduction to Pluralsight’s payment obligation under the TRA agreed to by the TRA beneficiaries would result in a direct corresponding increase in the price per share paid to our shareholders, the Transaction Committee promptly initiated arms’-length negotiations that were successful in greatly reducing the payment owed to the TRA beneficiaries under the TRA. These negotiations resulted in a
To be clear: the amendment to the TRA has the practical effect of transferring to Pluralsight’s public shareholders substantial value that would have otherwise been due to the TRA beneficiaries. It is further evidence of the robust and independent process managed by the Transaction Committee.
YOUR VOTE IS IMPORTANT
VOTE “FOR” THE TRANSACTION WITH VISTA EQUITY PARTNERS TODAY
We encourage you to vote in favor of the transaction, which appropriately recognizes Pluralsight’s business and prospects, and provides our shareholders with significant, immediate and certain value.
Your vote is extremely important, no matter how many shares you own. Please take a moment to vote “FOR” the proposal to adopt the merger agreement today.
If you have any questions or need assistance voting your shares, please contact Innisfree M&A Incorporated, Pluralsight’s proxy solicitor:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Shareholders (Toll-Free): 1-877-687-1866
Banks and Brokers (Collect): 1-212-750-5833
On behalf of the Transaction Committee and the Board of Directors, thank you for your continued support of Pluralsight.
Sincerely,
Aaron Skonnard Gary Crittenden Arne Duncan Bonita C. Stewart
Brad Rencher Fritz Onion Karenann Terrell Leah Johnson
Ryan Hinkle Scott Dorsey Tim Maudlin
About Pluralsight
Pluralsight is the leading technology workforce development company that helps companies and teams build better products by developing critical skills, improving processes and gaining insights through data, and providing strategic skills consulting. Trusted by forward-thinking companies of every size in every industry, Pluralsight helps individuals and businesses transform with technology. Pluralsight Skills helps enterprises build technology skills at scale with expert-authored courses on today’s most important technologies, including cloud, artificial intelligence and machine learning, data science, and security, among others. Skills also includes tools to align skill development with business objectives, virtual instructor-led training, hands-on labs, skill assessments and one-of-a-kind analytics. Flow complements Skills by providing engineering teams with actionable data and visibility into workflow patterns to accelerate the delivery of products and services. For more information about Pluralsight (NASDAQ: PS), visit pluralsight.com.
Forward-Looking Statements
This communication contains forward-looking statements that involve risks and uncertainties, including statements regarding our pending acquisition by affiliates of Vista Equity Partners (the “Transaction”), including items considered by the Transaction Committee and our Board of Directors in approving the Transaction. These forward-looking statements involve risks and uncertainties. If any of these risks or uncertainties materialize, or if any of our assumptions prove incorrect, our actual results could differ materially from the results expressed or implied by these forward-looking statements. These risks and uncertainties include risks associated with: the risk that the conditions to the closing of the Transaction are not satisfied, including the risk that required approvals from the stockholders of Pluralsight for the Transaction or required regulatory approvals are not obtained; potential litigation relating to the Transaction; uncertainties as to the timing of the consummation of the Transaction and the ability of each party to consummate the Transaction; risks that the Transaction disrupts the current plans and operations of Pluralsight; and the risks described in the filings that we make with the Securities and Exchange Commission (the “SEC”) from time to time, including the risks described under the headings “Risk Factors” and “Management Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K, which was filed with the SEC on February 25, 2020, and amended on March 2, 2020, and which should be read in conjunction with our financial results and forward-looking statements. Our filings with the SEC are available on the SEC filings section of the Investor Relations page of our website at http://investors.pluralsight.com. All forward-looking statements in this communication are based on information available to us as of the date of this communication, and we do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law.
Contacts
Investor Relations
Mark McReynolds
mark-mcreynolds@pluralsight.com
Media
DJ Anderson
dj@pluralsight.com
Joele Frank, Wilkinson Brimmer Katcher
Matthew Sherman / Jed Repko
212.355.4449
FAQ
What is the acquisition price for Pluralsight (NASDAQ: PS) by Vista Equity Partners?
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