(Bloomberg) -- An investor in Pluralsight Inc. is opposing the company's proposed takeover by Vista Equity Partners, arguing the $3.5 billion deal substantially undervalues the educational-software maker.
Akaris Global Partners, which said it has a stake of about 1% in Pluralsight, sent a letter to the company's board Monday calling the proposed takeover a “disappointing outcome for shareholders,” and said it plans to vote against the deal. The New York-based investment firm urged its fellow shareholders to do the same.
“The board is shortchanging management's numerous recent growth initiatives by selling the company well below fair value before those efforts bear fruit,” Akaris Global partners Aman Kapadia and Brian Hinkes wrote in the letter, a copy of which was seen by Bloomberg.
Vista agreed this month to acquire Pluralsight for $20.26 a share in cash, a 6.7% premium to the previous trading day's close. The company's shares have closed above the offer price since Dec. 15.
Representatives for Pluralsight and Vista weren't immediately available to comment.
The deal already has the support of shareholders that own the majority of the voting rights in Pluralsight, the company said at the time. The transaction does, however, also require the support of most of the others holders who are not party to a tax agreement that dates back to Pluralsight's initial public offering in 2018.
Akaris Global believes that the company's fair value is closer to $30 per share, before applying the sort of premium typical in a take-private deal. A takeover price of $37 per share would be more in line with the valuations of other publicly traded software-as-a-service companies, the investors wrote.
Akaris Global argues that the Vista offer doesn't take into account that Pluralsight is likely to benefit from corporations shifting to train employees digitally instead of using more expensive instructor-led education. Farmington, Utah-based Pluralsight is a leader in “IT continuing education,” the investment firm said, and has several initiatives that could boost revenue growth to more than 20%.
“Given all these initiatives are about to bear fruit, we are puzzled why the board would choose to sell the company without any real premium after the slowest-growth quarter in the company's disclosed history,” the investors wrote.
Akaris Global is also skeptical of the company's assertion that it will be better positioned to implement its growth strategy as a private company, and about potential conflicts of interest around the sales process.
“As a shareholder, we have conviction in management's strategic vision to innovate and strengthen the company's market position,” the pair said in the letter. “These are among the reasons why we own the stock and why we believe you can generate value over the coming years.”
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