Key Takeaways
- • Bain Capital agreed to acquire PowerSchool Holdings (NYSE: PWSC) in a transaction valuing the company at $5.6 billion, with stockholders receiving $22.80 per share in cash.
- • The offer represents a 37% premium to PowerSchool's unaffected share price of $16.64 as of May 7, 2024, the last trading day before media reports of a potential deal.
- • PowerSchool's tax receivable agreement was amended so that approximately $450 million in payments (over $2.00 per share) will not be made following the transaction.
- • Majority stockholders approved the deal by written consent; closing is expected in the second half of 2024, subject to regulatory approvals.
- • Debt financing is being provided by Ares Capital, HPS Investment Partners, Blackstone Alternative Credit Advisors, Blue Owl Credit Advisors, Sixth Street Partners, and Golub Capital.
Summary
PowerSchool Holdings, Inc. announced on June 7, 2024 that it has entered into a definitive agreement to be acquired by Bain Capital in a transaction valuing the K-12 cloud software provider at $5.6 billion. Under the terms, PowerSchool stockholders will receive $22.80 per share in cash upon completion. The price represents a 37% premium over the unaffected share price of $16.64 as of May 7, 2024, the last trading day prior to media reports regarding a potential transaction.
PowerSchool describes itself as a leading provider of cloud-based software for K-12 education, supporting more than 55 million students and over 17,000 customers in more than 90 countries. The company stated it will remain a standalone company, with business operations and customer service continuing without interruption. Hardeep Gulati, PowerSchool's Chief Executive Officer, said Bain Capital's support will provide additional resources to advance growth and innovation, particularly its PowerBuddy generative AI platform. David Humphrey and Max de Groen, Partners at Bain Capital, said they see significant opportunities to expand access to PowerSchool's product suite globally.
Vista Equity Partners and Onex Partners will retain minority investments in PowerSchool. Monti Saroya, Co-Chairman of PowerSchool's Board and Senior Managing Director at Vista, and Laurence Goldberg, Co-Chairman and Managing Director at Onex Partners, both commented on their partnerships with the company.
The PowerSchool Board approved the merger agreement following the recommendation of a Special Committee composed entirely of independent and disinterested directors. Stockholders holding a majority of outstanding voting securities approved the transaction by written consent, so no further stockholder action is required. The tax receivable agreement was amended so that no payments will be made in respect of or following the transaction; those payments had an estimated value of approximately $450 million. Upon completion, PowerSchool's common stock will no longer trade on the New York Stock Exchange and the company will become privately held. The transaction is expected to close in the second half of 2024, subject to customary conditions including regulatory approvals.
Goldman Sachs & Co. LLC is serving as exclusive financial advisor and Kirkland & Ellis LLP as legal advisor to PowerSchool. Centerview Partners LLC is exclusive financial advisor and Freshfields Bruckhaus Deringer LLP is legal advisor to the Special Committee. Ropes & Gray LLP is acting as legal advisor to Bain Capital.
PowerSchool describes itself as a leading provider of cloud-based software for K-12 education, supporting more than 55 million students and over 17,000 customers in more than 90 countries. The company stated it will remain a standalone company, with business operations and customer service continuing without interruption. Hardeep Gulati, PowerSchool's Chief Executive Officer, said Bain Capital's support will provide additional resources to advance growth and innovation, particularly its PowerBuddy generative AI platform. David Humphrey and Max de Groen, Partners at Bain Capital, said they see significant opportunities to expand access to PowerSchool's product suite globally.
Vista Equity Partners and Onex Partners will retain minority investments in PowerSchool. Monti Saroya, Co-Chairman of PowerSchool's Board and Senior Managing Director at Vista, and Laurence Goldberg, Co-Chairman and Managing Director at Onex Partners, both commented on their partnerships with the company.
The PowerSchool Board approved the merger agreement following the recommendation of a Special Committee composed entirely of independent and disinterested directors. Stockholders holding a majority of outstanding voting securities approved the transaction by written consent, so no further stockholder action is required. The tax receivable agreement was amended so that no payments will be made in respect of or following the transaction; those payments had an estimated value of approximately $450 million. Upon completion, PowerSchool's common stock will no longer trade on the New York Stock Exchange and the company will become privately held. The transaction is expected to close in the second half of 2024, subject to customary conditions including regulatory approvals.
Goldman Sachs & Co. LLC is serving as exclusive financial advisor and Kirkland & Ellis LLP as legal advisor to PowerSchool. Centerview Partners LLC is exclusive financial advisor and Freshfields Bruckhaus Deringer LLP is legal advisor to the Special Committee. Ropes & Gray LLP is acting as legal advisor to Bain Capital.
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