Educated Buy? Providence Equity Partners To Acquire Blackboard For $1.64 Billion In Cash

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Blackboard, the maker of learning and education software for enterprises and schools, announced Friday that it is being acquired by a group of investors led by Providence Equity Partners, a private equity firm that specializes in media, entertainment, communications and information investments. Providence has also invested in several for-profit educational companies, like Education Management Corporation and Archipelago Learning. The acquisition is an all-cash deal valued at $1.64 billion, with Providence assuming approximately $130 million in Blackboard debt.

The educational software giant, which went public on NASDAQ back in 2004, will be dishing out $45.00 in cash for each share of common stock owned by its shareholders as a result of the acquisition. According to Blackboard’s press release, the company has been “evaluating strategic alternatives” to its current trajectory in an effort to provide its stockholders with better value (than presumably what they’ve been getting up to this point).

Since rumors over a potential acquisition began percolating back in March, and the company more broadly announced that it was seeking prospective buyers on April 18 of this year, Blackboard’s stock has largely hovered above $40.00 per share. (Compared to its being priced at $37.16 a share on April 18, and averaging over $35 the last few years, $45.00 a share at acquisition does indeed seem to be relatively positive return on investment for its sharedholders.)

According to Blackboard’s press release, the transaction must be approved by a majority of stockholders, and is subject to other closing conditions and regulatory approvals, but the deal is expected to close in the fourth quarter of 2011. Once the transaction is finalized, Blackboard will return to being a privately held company. Blackboard said that it will remain headquartered in Washington and will continue to be led by its senior management team; however, when a company is purchased by a private equity group, and goes back to being a private company, changes are presumably ahead.

Although the announcement made no specific mention of cost or personnel cuts, these tend to be an inherent part of this kind of acquisition, so Blackboard may be on its way to a bit of a shakeup — or at least some streamlining and trimming — in the coming year.

While Blackboard’s products are certainly widely-used, with over 5,000 education institutions using the company’s software, Blackboard has not always had the best reputation among students, especially in terms of user experience. In fact, my college opted for its own customizable educational software for this very reason.

Yet, both because Blackboard got a head start on the market and has become fully entrenched in universities and across secondary education systems and because its user experience has left room for improvement, many education startups have popped up with their own models aimed at snatching up some of Blackboard’s market share, like CourseKit, Instructure, Nixty, to name a few.

Blackboard acquired Presidium for $53 million back in January of this year, and Saf-T-Net for $33 million in March of 2010.

For more, check out Blackboard’s announcement here.