Plato Loses in Bid for Renaissance; Lower Offer OK’d

Shareholders of Renaissance Learning, Inc., accepted a $455 million offer from a company formed by a European private equity firm rather than Plato's latest $496 million bid-but the decision has prompted some lawsuits.

After making several offers in a bidding war for Renaissance Learning, Inc., Bloomington-based Plato Learning, Inc., was unsuccessful in its attempt to acquire the educational software company.

At a special meeting on Monday, shareholders of Wisconsin Rapids, Wisconsin-based Renaissance instead approved a lower offer from a company formed by European private equity firm Permira Funds.

Under the terms of an agreement with Permira, Renaissance cofounders Terrance and Judith Paul-who control 69 percent of the company's shares-will receive $15 per share in cash, and all other shareholders will receive $16.60 per share. That amounts to an aggregate purchase price of about $455 million.

However, not everyone is happy about the deal reached between Renaissance and Permira. Renaissance said in a regulatory filing earlier this month that it faces two lawsuits-which were reportedly filed by minority stockholders-seeking to revoke the acquisition agreement because of “the alleged lack of independence of Renaissance Learning's board of directors and . . . fiduciary duty violations.”

Renaissance said that Plato has filed motions to intervene in those lawsuits in order to assert its own claims against Renaissance and its board. According to Renaissance's filing: “Plato Learning claims that Renaissance Learning failed to act in good faith in its dealings with Plato Learning by not engaging in a fair and just process and by rejecting what Plato Learning contends was a superior acquisition proposal; that Renaissance Learning and its board members allegedly accepted the Permira Fund's purportedly inferior acquisition proposal without legal justification and, in doing so, allegedly interfered with a prospective contractual relationship between Plato Learning and Renaissance Learning's shareholders; and that Renaissance Learning violated Wisconsin law by colluding and conspiring to reduce competition for purchasing Renaissance Learning and precluding Plato Learning from fairly acquiring Renaissance Learning.”

One of the parties that filed a lawsuit sought to prevent Monday's special shareholder meeting from taking place-but a Wisconsin court denied that motion.

Renaissance said that it believes the suits are “without merit” and that it intends to “vigorously defend against their claims.”

Plato and Permira have both been gunning for Renaissance since August. On August 15, Renaissance and Permira struck an agreement under which Permira would pay about $440 million for Renaissance. Plato then countered Permira's bid, offering $455 million-and Permira matched that offer.

Plato upped its bid to an aggregate $471, and then $496 million, after that-but the Pauls and the board continued to favor Permira's bid. Renaissance said in a regulatory filing that its board of directors had “unanimously determined in good faith, after consultation with its financial advisor, that the revised Plato Learning proposal could not reasonably be expected to lead to a superior proposal under the terms of the amended merger agreement with affiliates of the Permira Funds.”

Plato Learning-which was acquired by Thoma Bravo, LLC, in May 2010-provides online education services for kindergarten through adult learners.