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 $20.26 per share in
cash. Pluralsight’s independent Transaction Committee and the full
Pluralsight Board are each confident that this transaction, which
follows a thoughtful and thorough examination of Pluralsight’s
future prospects and challenges and is the result of a robust
market-check process, is in the best interests of all Pluralsight
shareholders. Your vote is very important. Please vote the
WHITE proxy card “FOR” the merger proposal and all other proposals
included in the definitive proxy statement for the March 2, 2020
Special Meeting of Pluralsight Shareholders.
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 30% in
June 2018 to 27% in November 2019 and 21% in November 2020. In
addition, Pluralsight has historically been unprofitable. As a
result of sustained volatility and slowing growth, Pluralsight’s
stock has traded down after eight of our 10 quarterly earnings
releases, with an average decline of 6%.
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 23% increase from the price initially offered by
Vista.
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 70% reduction in
the potential TRA payments to the TRA beneficiaries, representing
approximately $290 million of value. This amount, which would
otherwise have been payable to the TRA beneficiaries,
resulted in a dollar-for-dollar increase in the
consideration being paid to our shareholders and equates to an
increase in the per-share amount payable in the transaction of
approximately $1.80 per share. The Transaction Committee
negotiated for similar benefits to apply if a superior proposal
emerges; however, if a transaction with Vista (or such superior
proposal, if applicable) is not completed, the TRA obligations will
be reinstated in full.
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
Incorporated501 Madison Avenue, 20th
FloorNew York, New
York 10022Shareholders
(Toll-Free): 1-877-687-1866Banks 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 RelationsMark
McReynoldsmark-mcreynolds@pluralsight.com
MediaDJ Andersondj@pluralsight.com
Joele Frank, Wilkinson Brimmer KatcherMatthew Sherman / Jed
Repko212.355.4449
Pluralsight (NASDAQ:PS)
Historical Stock Chart
From Jun 2024 to Jul 2024
Pluralsight (NASDAQ:PS)
Historical Stock Chart
From Jul 2023 to Jul 2024