Blackboard Buyout Arrives, At Full Value (BBBB)

Blackboard Inc. (NASDAQ: BBBB) did get its buyout from private equity firm Providence Equity Partners.  The deal is an all-cash buyout valued at $1.64 billion plus the assumption of approximately $130 million in net debt.  If you are one of those investors who likes to buy merger stocks in hopes of a higher buyout price, we would caution that we have already noted how the price is effectively at full-value already.

Blackboard shareholders will get a $45.00 per share buyout from Provident.  The transaction premium is tiny compared to the $43.39 close yesterday, but this is actually a premium of about 21% since the April 18, 2011 close.  It was the next day that Blackboard made its public announcement that it was evaluating strategic alternatives.

What is interesting is that press release related back to April 18 as that “strategic alternatives” date, but the following was noted: “The agreement between Blackboard and Providence concludes a process that began in March 2011, when Blackboard’s Board of Directors formed a Transaction Committee consisting of independent Directors to conduct a comprehensive review of strategic alternatives that included discussions with potential strategic and financial buyers.”

Blackboard’s board of directors has approved this deal and the recommendation is for shareholders to approve this deal.  This merger is not expected to close until the fourth quarter of this year.

We considered the last “news-pop” to be a full-valuation already.  The only difference here that may come up ahead is that Blackboard may need to be considered more of a broad-based real-time collaboration and communications suite rather than what most consider it as: an education communications system.

After the $43.39 close, shares are trading at $44.15 after being lifted from the halt.  Blackboards’s 52-week trading range is $32.55 to $50.26, but that $50 price was after the hype of strategic alternatives.  Sometimes traders will pay up far too much in valuation just because a company thinks it can find a buyer.

JON C. OGG