Plato Ups Bid for Software Co.; Offer is Rejected

Plato's $471 million bid for Renaissance Learning is the highest offer on the table, but Renaissance's board of directors is recommending that shareholders approve a $455 million buyout offer from global equity firm Permira Funds.

Bloomington-based Plato Learning, Inc., on Tuesday upped its bid for educational software company Renaissance Learning, Inc.-but Renaissance's board is still recommending that shareholders approve a lower buyout offer.

Wisconsin Rapids, Wisconsin-based Renaissance said in a Wednesday regulatory filing that Plato raised its offer and agreed to pay $15.10 for each share owned by Renaissance co-founders Terrance and Judith Paul, who control 69 percent of the company's shares, and $18 for all other shares-for an aggregate purchase price of $471 million. The all-cash deal would be financed with $144 million in equity and $410 million in debt, and Plato has lined up commitments and guarantees for that funding.

But according to the Wednesday filing, “the Pauls have informed Renaissance Learning's board of directors that they will not support an acquisition of Renaissance Learning by Plato Learning” following Plato's revised offer-and consequently, the board “will not pursue negotiations with Plato Learning.”

Instead, the Pauls will vote their shares in favor of a definitive merger agreement reached with global equity firm Permira Funds.

On August 15, Renaissance and Permira struck an agreement under which Permira would pay $14.85 per share in cash for Renaissance-and a shareholder vote on the acquisition was scheduled for October 17.

But in late August, Plato countered Permira's bid, offering to pay $15.50 in cash in a transaction valued at $455 million. Following Plato's counter-offer, Permira upped its bid to match Plato's $455 million proposal.

Renaissance said in its Wednesday filing that it has entered into an amended agreement with Permira under which it will be sold to Permira for $455 million. The deal is still subject to a shareholder vote next month and customary closing conditions.

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

Shares of Renaissance's stock were trading up 0.4 percent at $16.96 on Thursday morning.