Providence to Buy Blackboard for $1.64 Billion, Gain Educational Software

By Douglas MacMillan – Jul 1, 2011 8:15 AM ET

Providence Equity Partners Inc. agreed to buy Blackboard Inc. (BBBB), a maker of online educational software, for $1.64 billion.

Providence will pay $45 a share in cash for Washington- based Blackboard, the companies said in a statement today. The price represents a 21 percent premium over Blackboard’s closing price on April 18, the day before the company said it would evaluate strategic alternatives, the companies said.

Founded in 1997, Blackboard makes software that lets teachers post course materials, conduct discussions and make assignments online. Since April, when the company said it was working with Barclays Capital to review unsolicited buyout offers, Blackboard considered bids from Providence and Hellman & Friedman LLC, a person familiar with the matter said this month.

The deal is “the result of a comprehensive evaluation of our strategic alternatives,” said Michael Chasen, Blackboard’s president and chief executive officer, in the statement. The transaction is expected to close in the fourth quarter, the companies said.

Blackboard has expanded offerings to include a messaging service called Blackboard Connect and Blackboard Transact, a payment product that allows college students to use their identification cards for purchases on and off campus.

The acquisition marks Providence’s third education deal in recent years. The private equity firm acquired educational services provider Study Group Pty Ltd. last year. It joined with Goldman Sachs Capital Partners and Leeds Equity Partners to acquire for-profit college operator Education Management Corp., which sold shares to the public in 2009.

Providence, founded in 1989, manages $23 billion and focuses on media, communications, information and education investments, according to its website.

Blackboard fell 25 cents to $43.39 yesterday in Nasdaq Stock Market trading and had climbed 5.1 percent this year before today.

To contact the reporter on this story: Douglas MacMillan in San Francisco at dmacmillan3@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net;