Blackboard's Next Chapter

This post marks the end of a self-imposed quiet period while Blackboard’s Board of Directors considered “strategic alternatives” for the company. As a member of the company’s senior management team I was understandably asked not to speak freely on the topic, so I held my tongue until I could share something more substantive.

First, I’ll confirm the news: Subject to shareholder approval and regulatory reviews, we have agreed to be acquired by an investor group led by Providence Equity Partners, a private equity firm with a portfolio of education companies and a great expertise in our industry. We expect the deal to be finalized later this year. Details can be found in our press release. Until the deal closes we continue to operate as a public company. Following the deal we continue to operate as Blackboard Inc., but as a privately held company.

Second, some perspective on the financial underpinnings and their implications.  Since 2004, Blackboard stock has been publicly traded, with shares owned by some thousands of holders, with the highest concentration of shares held by a few dozen institutional investors. The focus of most institutional investors is predictable revenue, and rock-steady growth. And so we made best efforts to respond to them accordingly, with precision focus on our quarter-to-quarter earnings and on the impact of our business decisions against analysts’ investment models for our stock.  Our care was rewarded, and this public form of ownership benefitted Blackboard well over these last seven years and allowed us to better scale our offering to clients. 

Private equity now provides us an alternative ownership model that’s more agile.  For starters, firms like Providence include very experienced investors willing to hold highly concentrated portfolios. They’re often willing to take longer-term perspectives and assist management in capitalizing on the most strategic opportunities for growth and impact in their industries. Providence brings a deep bench in understanding of the global education marketplace, and arrives to the fight very well informed about today’s market dynamics.

It’s natural that news of this magnitude would raise questions for our clients. Will there be sudden changes to policy, pricing, or strategy? It is our plan that the key strategies that brought us here will continue to guide our path. Critical to our success in recent years has been our focus on Blackboard’s performance on the fundamentals, sustaining the steady improvements we’re making in support responsiveness, openness, transparency, and quality. I envision no change in our underlying commitment to these fundamentals. And I’ll reassure you that we expect our pricing practices to remain within historical norms for the foreseeable future.

Providence shares our vision of improving the education experience for our clients, and of the mission critical role our platforms and services play in teaching and learning today. While we’ve yet to fully explore alignment of our ideas, we begin with similar macro views about Blackboard’s prospects and the broad scope of our future opportunity to help create education impact. I think it’s fair to say there’s strong shared belief in the importance of mobile education and a growing institutional demand for analytics. It’s also fair to say both parties believe K-12 and global markets deserve investment, and provide strong potential growth for Blackboard. Finally, we’ve discovered alignment in views about the importance of the shift from print to digital education content, and that Blackboard can catalyze this trend to the benefit of our clients. 

So I think this is a positive development for our clients, and a positive one for Blackboard. In the end our job is to balance interests of both our clients and investors, and these balances are best achieved with a view to the long run. I’m confident that the new arrangement will improve our alignment, and provide us both improved agility and additional wisdom in confronting what comes along the way.

Cheers,

Ray

 

Forward-Looking Statements

This blog post contains forward-looking statements, including those regarding the proposed transaction.  These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including but not limited to:  the ability of the parties to consummate the proposed transaction in a timely manner or at all; the satisfaction of conditions precedent to consummation of the transaction, including the ability to secure regulatory approvals and approval by Blackboard’s stockholders; successful completion of anticipated financing arrangements; the possibility of litigation (including litigation related to the transaction itself); and other risks described in Blackboard’s filings with the Securities and Exchange Commission, including its most recent Form 10-Q.  All forward-looking statements are based on management’s estimates, projections and assumptions as of the date hereof, and Blackboard does not undertake any obligation to update any forward-looking statements.

Additional Information and Where to Find It

Blackboard intends to file with the Securities and Exchange Commission (the “SEC”) a proxy statement in connection with the proposed transaction.  The definitive proxy statement will be sent or given to the stockholders of Blackboard and will contain important information about the proposed transaction and related matters.  BEFORE MAKING ANY VOTING DECISION, BLACKBOARD’S STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT CAREFULLY AND IN ITS ENTIRETY BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.  The proxy statement and other relevant materials (when they become available), and any other documents filed by Blackboard with the SEC, may be obtained free of charge at the SEC’s website at www.sec.gov.  In addition, security holders will be able to obtain free copies of the proxy statement from Blackboard by contacting Blackboard’s Investor Relations Department (i) by mail to Blackboard Inc., 650 Massachusetts Avenue, NW, 6th Floor, Washington, DC 20001, Attn: Investor Relations Department, (ii) by telephone at 202-463-4860 or (iii) by e-mail to Investor@Blackboard.com.

Participants in the Solicitation

Blackboard and its directors and executive officers may be deemed to be participants in the solicitation of proxies from Blackboard’s stockholders in connection with the proposed transaction.  Information about Blackboard’s directors and executive officers is set forth in Blackboard’s proxy statement for its 2011 Annual Meeting of Stockholders, which was filed with the SEC on April 21, 2011, and its Annual Report on Form 10-K for the year ended December 31, 2010, which was filed with the SEC on February 18, 2011.  These documents are available free of charge at the SEC’s web site at www.sec.gov, and from Blackboard by contacting Blackboard’s Investor Relations Department (i) by mail to Blackboard Inc., 650 Massachusetts Avenue, NW, 6th Floor, Washington, DC 20001, Attn: Investor Relations Department, (ii) by telephone at 202-463-4860 or (iii) by e-mail to Investor@Blackboard.com.  Additional information regarding the interests of participants in the solicitation of proxies in connection with the transaction will be included in the proxy statement that Blackboard intends to file with the SEC.