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Kirkland Helps Thoma Bravo, Plato In $291M Software Deal

Thoma Bravo LLC-owned Plato Learning Inc. will buy fellow educational software maker Archipelago Learning in a $291 million agreement, the private equity firm said Monday.

Plato Learning will pay $11.10 per Archipelago Learning share in cash, about 23 percent more than the stock's March 2 per- share closing price of $9.04. Plato Learning has secured financing commitments for the deal from Credit Suisse and Jefferies Finance LLC, it said.

The target's board of directors unanimously approved the deal. The acquisition is subject to regulatory and Archipelago Learning stockholder approval. Private equity firm Providence Equity Partners and other Archipelago Learning shareholders have agreed to support it.

The deal represents the culmination of Archipelago Learning's search for a buyer in which it formed a transaction committee and considered "a number of parties ... through a formal, competitive, process," it said.

"Plato Learning is an excellent partner for Archipelago Learning, with a strong presence in online core curriculum that is highly complementary to our online supplemental curriculum," said Tim McEwen, Archipelago Learning's chairman, CEO and president.

"With our combined financial strength and additional support from Thoma Bravo, we have the means to support our continued innovation and expansion to more comprehensively meet the needs of our customers," McEwen said.

The acquisition includes provisions for either software company to scuttle the deal under certain circumstances. If Archipelago Learning pulls the plug, it could owe Plato Learning $10.18 million, but if Plato Learning terminates the deal, it could be on the hook for $20.27 million, according to regulatory filings with the U.S. Securities and Exchange Commission.

The combined company will have dual operations centers in Bloomington, Minn., and Dallas, and its customers will include 50,000 schools and 17 million students ranging in age from prekindergarten through adulthood.

"This acquisition allows us to cover the entire spectrum of learning needs from pre-K through postsecondary, as well as reach a broader group of students and educators with a product portfolio that sets a rigorous standard in online education," Plato Learning CEO Vin Riera said.

Plato and Thoma Bravo were advised on the deal by Kirkland & Ellis LLP partners Gerald T. Nowak and Theodore A. Peto and associate Bradley C. Reed.

Archipelago received legal advice from Weil Gotshal & Manges LLP partners R. Jay Tabor, Jared Rusman, Michael Kam, Karen Ballack, Laura Wilkinson, Annemargaret Connolly and Andrew Yoon and associates Sara Duran, Jennifer Seymour, Dilen Kumar, Mark Schwed, Avi Sinensky, Kwang-chien Ger, Matthew Morton, Eric Min and Justin Lee. It received financial advice from Barclays Capital.

The transaction committee and Archipelago's board of directors received legal advice from Vinson & Elkins LLP.